FARMERS'
RESPO~SES
TO ECONOMIC R£STRUCTURING
IN HURUNUI ANO CLUTHA COUNTIES:
PRELIMINAkY ANALYSIS OF SURVEY DATA
by
John R Fairweather
RESEARCH REPORT NO. 187
MAY 1987
Agribusiness and Economics Research Unit
Li nco 1n Co 11 ege
Canterbury
New Zealand
ISSN 0069-3790
AGRIBUSINESS & ECONOMICS RESEARCH UNIT
The Agribusiness and Economics Research Unit (AERU)
operates from Lincoln College providing research expertise for
a wide range of organisations concerned with production,
processing, distribution, finance and marketing.
The AERU operates as a semi-commercial research agency.
Research contracts are carried out for clients on a commercial
basis and University research is supported by the AERU through
sponsorship of postgraduate research programmes. Research
clients include Government Departments, both within New
Zealand and from other countries, international agencies, New
Zealand companies and organisations, individuals and farmers.
Research results are presented through private client reports,
where this is required, and through the publication system
operated by the AERU. Two publication series are supported:
Research Reports and Discussion Papers.
The AERU operates as a research co-ordinating body for the
Agricultural Economics and Marketing Department and the
Department of Farm and Property Management, Accounting and
Valuation. This means that a total staff of approximately 50
professional people is potentially available to work on research
projects. A wide diversity of expertise is therefore available for
the AERU.
The major res\'larch areas supported by the AERU include trade
policy, marketing (both institutional and consumer), accounting,
finance, management, agricultural economics and rural
sociology. In addition to the research activities, the AERU
supports conferences and seminars on topical issues and AERU
staff are involved in a wide range of professional and College
related extension activities.
Founded as the Agricultural Economics Research Unit in 1962
from an annual grant provided by the Department of Scientific
and Industrial Research (DSIR), the AERU has grown to become
an independent, major source of business and economic research
expertise. DSIR funding was discontinued in 1986 and from April
1987, in recognition of the development of a wider research
activity in the agribusiness sector, the name of the organisation
was changed to the Agribusiness and Economics Research Unit.
General policy direction is provided by an AERU Review
Committee which meets annually. An AERU Management
Committee comprised of the Principal, the Professors of the two
associated departments, and the AERU Director and Assistant
Director administers the general Unit policy.
AERU REVIEW COMMITTEE
Professor B J Ross, M.Agr.Sc.
E J Neilson, C.B.E., B.A., B.Com., F.C.A., F.C.I.S.
(Principal, Lincoln College)
Professor R H Juchau, B.Com., B.Ed., M.A.
(Lincoln College Council)
P J Rankin, M.A., M.P.A.
(Director, New Zealand Planning Council)
(Professor of Accounting and Finance, Lincoln College)
Professor A C Rayner, B.Com. (Hons), M.Soc.Sc.
(professor of Agricultural Economics, Lincoln College)
P G Bushnell, B.Agr.Sc., M.Agr.Sc., Ph.D.
(Director, Economics Division, Ministry of Agriculture and
Fisheries)
B D Chamberlain
(President, Federated Farmers of New Zealand)
R T J Clarke, M.Sc., Ph.D.
(Chief Director, Department of Scientific and Industrial
Research)
P Shirtcliffe, B.Com., A.C.A.
(Nominee of Review Committee)
J G Pryde, O.B.E., M.A., F.N.Z.I.M.
(Director, Agribusiness and Economics Research Unit)
(ex officio)
R L Sheppard, B.Agr.Sc. (Hons), B.B.S.
(Assistant Director, Agribusiness and Economics
Research Unit) (ex officio)
AERU MANAGEMENT COMMITTEE 1987
Professor A C Bywater, B.Sc., Ph.D.
(Professor of Farm Management)
Professor R H Juchau, B.Com., B.Ed., M.A.
(Professor of Accounting and Finance)
Professor A C Rayner, B.Com. (Hons), M.Soc.Sc.
(Professor of Agricultural Economics)
Professor A C Zwart, B.Agr.Sc., M.Sc., Ph.D.
(Professor of Marketing)
J G Pryde, O.B.E., M.A., F.N.Z.I.M.
(Director, AERU)
R L Sheppard, B.Agr.Sc. (Hons), B.B.S.
(Assistant Director, AERU)
AERU STAFF 1987
Director
J G Pryde, O.B.E., M.A., F.N.Z.I.M.
Assistant Director
R L Sheppard, B.Agr.Sc. (Hons), B.B.S.
Visiting Research Fellows
G R Griffith, B.Ag.Ec., M.Ec., Ph.D.
Professor L T Wallace, Ph.D.
Senior Research Economist
S K Martin, B.Econ., M.A. (Hons), Ph.D., Dip. Tchg.
Research Economists
G Greer, B.Agr.Sc. (Hons)
R G Moffitt, B.Hort.Sc., N.D.H.
Research Sociologist
J R Fairweather, B.Agr.Sc., B.A., M.A., Ph.D.
Assistant Research Economists
J E Chamberlain, B.Agr.Sc.
T P Grundy, B.Sc. (Hons), M.Com.
J C Robertson, B.Com.Ag., M.Com.
Secretary
R Searle
CONTENTS
Page
LIST OF TABLES
(i)
PREFACE
(i i i)
ACKNOWLEDGEMENTS
(v)
(vi i)
CHAPTER 1
APPROACHES TO UNDERSTANDING FARMERS
ECONOMIC RESTRUCTURING
I
RESPONSES TO
1
1.1
Introduction
1
1.2
International Back9round and Policy Issues
1
1.3
The New Zealand Case
3
1.4
Farming Strategy and Structural Change
5
1.5
The Research Problem
8
CHAPTEI{ 2
METHOD
11
2.1
Introduction
11
2.2
The Questionnaire, Sample, and Response Rate
11
2.3
Sample Representativeness
12
2.4
Limitations of the Method
13
RESULTS
15
3.1
Introduction
15
3.2
General Characteristics of All Respondents
15
3.3
Financial Situation
17
3.4
Farmers ' Responses to Economic Change
21
3.5
General Attitudes
25
3.6
Approach to Farming
30
SUMMARY AND CONCLUSION
39
4.1
Introduction
39
4.2
Summary of Main Findings
39
4.3
General Implications of the Findings
40
4.4
Future Research
40
CHAPTER 3
CHAPTER 4
LIST OF REFERENCES
APPENDIX 1
The Questionnaire
43
LIST OF TABLES
Page
TABLE NO.
1.
2.
3.
Comparison of Farm Type Using Agricultural Statistics
Data and Survey Data
12
Comparison
of Farm
Size Distribution
Agricultural Statistics Data and Survey Data
13
Number
County
and
Size
of Farm by Extent of Farming
Using
and
17
4.
Approximate Financial Situation 1985/86
18
5.
Respondents' Statement of Financial Situation
19
6.
Largest Area of Borrowing in Last Two Years
20
7.
Preferred rvlanagement Strategy
21
8.
New Land Uses Undertaken or Intended
22
Y.
Management Strategies Considered or Adopted
23
10.
Extent of Change in Total Capital Expenditure
24
11.
Distribution of Future Investments
25
12.
Importance of People as Cause of Recession
26
13.
Importance of Types of Assistance
28
14.
Directions of Change in Next Ten Years
29
15.
Degree
30
16.
Level of Agreement with Management Statements
31
17.
Factor Scores for Each Management Statement
32
18.
Level of Agreement for
Management Statement
of Change Desired for Processing and Marketing
Each Factor
and
for
Each
35
19.
Level of Importance of Motivation Statements
36
20.
Factor Scores for Each Motivation Statement
37
21.
Level of Importance for
Motivation Statement
Each Factor and
(i)
for
Each
38
PREFACE
Primary production is undergoing rapid changes at the present
tilne and there are two broad areas where these changes have an impact.
The first and most immediate impact is on farmers themselves as they
seek to adjust to a new economic order. The second impact is on the
character of the structure of agriculture. Decisions taken now by
individual farmers add up to longer term changes in the overall
character of the pri mary producti on industry. The AERU contri butes to
understanding primary production by undertaking research which focuses
on these two types of changes.
A topic of immediate concern is farmers' responses to economic
restructuring.
In this research report Dr Fairweather begins the
process of studying changes in primary production by reporting the
results of a survey of farmers in Hurunui and Clutha
counties
undertaken in August/September 1986.
The report gives a general
overview of farmers responses and includes data on financial situation
in conjunction with attitudes, needs, and approach to farming.
J G Pryde
DIRECTOR
( iii)
ACKNOWLEDGEMENTS
The author is grateful for financial support from the ~linistry
of Agriculture and Fisheries, Advisory Services Division, and for the
assistance rendered by those farmers who contributed to the survey.
( v)
sur~I~ARY
The preliminary results from a 1986 survey of farmers in
Hurunui and Clutha counties are presented in this report. The survey
included 3H4 farmers and the results give an indication of how farmers
were responding to changes in government policies.
Some of the results are as follows. Nearly one quarter of
respondents say they have to make a major adjustment. Few seek to
diversify, but over one quarter have developed new land uses.
Many
have adopted a low input policy with expenditure cut back by $10,000.
While most respondents disapproved of government policy there were 20
percent who
did approve.
Most
respondents wanted
recognition,
financial advice and change in government policy, but few wanted
financial or technical advice from MAF. There was awareness that the
future of primary production would be dominated by market related
factors. In general, the report presents much decriptive data parts of
which should De of value to a wide range of people with rural
interests.
While the literature on farmer adjustment suggests that there
are two different types of management strategy, the New Zealand data
reveal four approaches to management strategy and three types of
motivation for farming. The four types of manager are:
'financial
manager',
'productivity increaser',
'individualistic worker' and
'"I i festyl e farmer'.
( vi i )
CHAPTER 1
APPROACHES TO UNDERSTANDING FARMERS 1
RESPONSES TO ECONOMIC RESTRUCTURING
1.1
Introduction
The intention of Chapter 1 is to provide a background to
economic change in agriculture.
The changes that have occurred
internationally are used to show that the events in New Zealand are not
unique.
Later in this chapter some literature is reviewed in order to
show what role farming strategy and structural change play in economic
adJustment.
Finally, the problem for research is defined in terms of
the need to know accurately how farmers respond to economic change.
1.2
International Background and Policy Issues
Similar conditions affect the position of farmers in Australia,
Europe, Canada and the United States. In general terms, there are
problems of overproduction and low commodity prices combined with high
interest rates and falling land values. These factors result in acute
financial pressure on farmers. The situation in the US has received
wide attention. Tweeton (in Hillman, 1984) states that there are three
problems with farming:
overproduction, the level and variation of
return on resources, and high farm failure rates. According to Walston
and Roberts (1985) farmers in the US now face their worst situation
since the 1930 1s, and there have been bank failures and declining
machinery and input sales. They argue that the inevitable result is a
remorseless fall in farm numbers.
Similar descriptions are found for other countries.
In the
last five years bankruptcies in Canada increased from 0.04 percent of
census farms to 0.45 percent of census farms (Kooters and Arthur,
1985). For Britain, Nix (1985) states that overproduction, decreased
product prices and relatively steady input prices have resulted in a
drop in farm income since 1976.
The similarity of the problems facing farmers serves to
illustrate the international character of contemporary agriculture. In
fact, as SChuh (1986) argues, agriculture can be understood only in the
context of trends in the global economy. To some extent all producers
are linked to international trends
in food prices.
Typically.
commodity prices show a long-term price decline. Also, there is an
international food and monetary system which can force adjustments in
any country1s agricultural sector regardless of changes in internal
cost structure. It appears that many Western nations have agricultural
sectors adversely affected at the present time by these international
trends.
There are data which support the view that the problems faced
by farmers are caused, in part at least, by declining commodity prices.
International Monetary Fund data show that the weighted index of
primary commodity prices has fallen from a high of 100 in 1980 to 76 in
1985 - the saine level as for 1974. The index of market prices for food
shows a decline from 89 in 1983 to 75 in 1985.
Specifically. beef
prices and lamb prices both followed the trend and declined steadily.
1
2
For agricultural raw materials (including wool) the index increased
from 84 in 1983 to 88 in 1984, then declined to 77 in 1984. Fine wool
followed this particular pattern while coarse wool declined steadily.
Generally then, the international
prices of agricultural
commodities have declined since 1980. It is difficult to evaluate the
significance of the decline, and on the above figures it is appropriate
to note that falling international prices have coincided with changes
in domestic policy and economy to add to farmers ' financial burdens.
Another common element to farmers 1 current problems derives
from changes in the extent of borrowing. It appears that a significant
proportion of individual farmers, but not necessarily all of them, have
increased their rate of borrowing in the last decade. Borrowing has
been successful where commodity prices are stable, government poliCies
supported agriculture, and While farm land prices increased. Borrowing
appears to have characterised farming in Europe, North America, and
Australasia.
For example, farmers in Ireland avoided debt up to 1970
and then in the 1970 ' s took up more credit (Atwood, 1983). In Atwood's
view not all the borrowing was subject to careful scrutiny, and some
loans WOuld have involved repayment problems even if there were not an
economic down-turn in agriculture.
The issue of the wisdom of
borrowing remains open and is not resolved by apportioning blame after
the fact.
It seems fair to say that agricultural borrowing became a
popular strategy for many farmers and this change in behaviour has been
an important factor in the current financial crisis.
There have been a wide variety of policy responses to farmers 1
financial prOblems and many suggestions for improvement. For example.
the UK Economist (1985) emphasises that the family farm prOblem in the
US is a liquidity prOblem not an insolvency criSis, hence it would be
unwise to
influence commodity prices
because of
the
adverse
consequences which would follow. In their view, new policy should be
aimed at decreasing debt service repayments. Tweeton (in Hillman,
1984) advocates sound monetary and fiscal policy to promote national
economic growth, and payments to farmers to store grain buffer stocks
in order to achieve stable prices. On another tack, Schwab (1985)
suggests using the 1939 mortgage moratorium statute, subsidisation of
interest rates, and the establ i shment and deployment of farm debt
review loans.
However, some research on the 1930s US farm foreclosure
moratoria suggests that while some farmers averted foreclosure, there
were failures despite the provision of assistance (Alston, 1984). Yet
another suggestion is group farming which is thought to provide
economies of size from specialisation (Bartholomaeus, 1981). Finally,
Nix (1985) advocates greater budgetary control and low cost farming
which may have high management and investment savings when compared to
high input farms.
Alternatively. farmers can attempt to improve the
quality of product, undertake auxilliary enterprises to add value to
their produce (e.g., cheesemaking), or take on a part-time job.
Few observers analysing the farm debt prOblem and possible
policy options consider the broad trends in agriculture and what
general kinds of policy changes are needed for the future. Given the
rapid changes in agriculture and the acute problems farmers face it
seems relevant to throughly reappraise agricultural policy.
Cochrane
(1985) does this by giving an historical overview of US farm structure
change and agricultural policy. He concludes that high prices have
accompanied increased production because of government programmes.
Early adopters of new technology have enjoyed a permanent rise in
3
income and have then expanded farm size, thereby increasing the price
of land.
Generally, programmes aimed at helping mid-sized farms have
actually contributed to their demise. Cochrane advocates removal of
all price and income benefits, while at the same time advocating a
government role in assisting necessary adjustments, especially debt
restructuring of indebted farmers rather than forcing them out of
production.
Some farmers need managerial guidance.
Similarly,
Urban (1985) takes a critical view of
past
agricultural policy and advocates a general rural development policy
rather than a farm policy as traditionally conceived. He argues that
since the 1920's US agricultural policy has focused on control of
prices, supply, farm credit, and productivity increases via federal
and state research and development. Rapid social and economic changes
were needed to acnieve these policy goals. Urban argues that these
post-1920 policies are dangerous now because they lead to overprlclng
of products, dislocation of farmers and suppliers, and decrease the
effectiveness of the food production system. Thus, what is needed is a
strong rural economy of independent businesses and recognition that
differences in regional production require specific policy.
Thus,
local and regional groups should De involved in
directly-funded
programmes but without the link between farmers and federal government.
Similar criticisms of the relevance of traditional agricultural policy
have been made by Lee (1983) in response to recent changes in farm
structure.
It is quite clear that agricultural policy is in a state of
change, at least in terms of discussion about general objectives if not
in terms of practical application. The acute financial problems faced
by farmers in many countries suggests that new policies may emerge in
the present decade. One of the issues in New Zealand is establishing a
distinctive agricultural policy in an environment where agriculture is
subordinated to the dictates of macroeconomic policy.
1.3
The New Zealand Case
According to the 1986 Agricultural Review Committee, the main
elements of farmers' financial problems in New Zealand are static world
prices and wide ranging economic policy changes (State of Agriculture
Report, 1986).
Among the latter are the floating of the New Zealand
dollar, removal of interest rate and other controls, and a reduction in
subsidies.
The results of the new policies included a high exchange
rate for most of 1986, which disadvantages all exporters. and high
domestic interest rates. Farmers faced declining sheep and beef gross
incomes, increased input costs deriving
in part from continued
inflation, and very high interest rates. In addition, land values have
declined thereby increasing debt to equity ratios. Prior to policy
changes there have been droughts which were 'an important' backdrop to
current financial problems.
The farm problem in New Zealand can be examined from a number
of viewpoints. The Meat and Wool Boards' Economic Service provides one
of the better documented examinations of farmers' financial problems,
although their interpretation of their survey data must be accepted
cautiously.
The following account gives an overview of the main
findings of the Meat and Wool Boards' Economic Service and includes
some cautionary comments.
4
The Meat and Wool Boards ' Economic Service research papers
(Nos. 1930 and 1931, 1986) conclude that the prices of farm inputs
used by sheep and beef farmers increased by 13.2 percent between
January 1985 and January 1986, compared with a 10.1 percent increase
the year before. Interest charges showed the biggest increase so that
high interest rates, coupled with increased borrowing, meant that
interest charges were the largest single expenditure item on an average
farm. In addition, the papers note that sheep productivity, while less
than the previous year, was still at a high level. Stocking rates were
expected to fall. Prices received at the farm gate had fallen by 17
percent so that the terms of exchange were expected to decline by 27
percent over the 1985/86 year. Gross farm income for 1985/86 was
estimated to fall by 22 percent or $28,200 per farm. With respect to
farmers ' debt, data show that with a 40 percent decrease in land
values, which is a reasonable estimate of the actual decline in land
value, there was an increase from six to 18 percent of farmers with
equity less than bO percent of total farm value. In general. farmers
faced increased input costs and declining returns which manifest as
cash flow problems and increasing debt to equity ratios.
Later reports from the Meat and Wool Boards ' Economic Service
show similar findings, and although many farmers experienced limited
improvement on some financial indices, there were many facing acute
financial problems.
In addition, the Boards state that farmers are
adjusting to the present economic environment by moving to a system of
lower inputs and lower outputs.
However, the Meat and Wool Boards ' Economic Service historic
data show that rapid increases in interest rates and other input costs
have occured before.
For example, interest rates increased by 23
percent between 1980 and 1981, and repairs and maintenance increased by
27 percent between 1978 and 1979. At the same time as farmers faced
these large increases in input costs farm land values increased by 22
percent.
It is more sanguine to suggest that it is the combination of
financial pressure with falling land values which makes for a different
situation in 1986. Earlier input increases were found to be tolerable
in an environment of rising land values.
Surprisingly. other data show some decreases in input pric~s.
According to the Statistics Department, the all farming input prlce
index for the March 1986 quarter decreased by 1.2 percent, and for the
June 1986 quarter decreased by 2.6 percent. By September 1986 the
quarterly aecline was a minimal 0.6 percent. The Statistics Department
all farming inputs price index excludes expenditure on interest,
government charges and wages. These Statistics Department data suggest
that there was a lowering of many input costs through 1986.
Generally then, as the Meat and Wool Boaras ' Economic Service
argues, farm income generated from the market has been insufficient for
the needs of the farm operation. For a considerable period of time
many farmers have been net borrowers, borrowing more than was being
Such farmers were forced
to borrow for
both
repaid annually.
development and to finance current expenditure, and this borrowing was
initially possible because of high and increasing levels of farm equity
bought about by rising land values. This explanation fits in with
detailed research on farmers consumption and borrowing behaviour on
North Island hill country farms (Beck and Dent, 1984). They argue that
farmers are not averse to borrowing but that they may be averse to
incurring significant levels of debt. Thus, in times of inflation,
5
farmers will borrow because
their debt to equity ratio.
it is possible to hold or
even
improve
The wiSdom of this borrowing policy has been questioned before
the current crlS1S in 1986. In October 1984 Atwood noted that the
yrowth of farmers' equity, when aggregate farm incomes have been
static, can create an unrealistic degree of willingness to take on
loans against the security of the farm property.
Atwooa emphasised
that few farmers would be willing to meet debt repayments out of
equity.
However, despite this and presumably other warnings, farmers
considered that their level of borrowing was an acceptable and
profitable business practice. Given the environment at the time in
which the decision to borrow was made, it is most likely that the
decision was rational.
The Advisory Services Division of r~AF provides
another
viewpoint on sheep and beef farming with its farm monitoring system
(MAF, 1986).
The data are based on a selection of a small number of
farms that are thought to be typ; cal for the area and for farm type.
For the all classes representative farm, gross farm income for the
1985/86 season was expected to be down by at least $28.000 or 24
percent on last season's income. Revenue from sheep sales was down by
46 percent, from cattle sales down by 18 percent, and from wool sales
down by 13
percent.
Farmers adjusted by reducing farm working
expenditure on fertilizer, repairs and maintenance, weed and pest
control, and labour. Total farm working expenditure was down $11,000
or 18 percent over the previous season.
Total financial charges
increased 13 percent in the 1985/86 year and required 27 percent of
gross farm income -- interest payments alone accounting for 20 percent
of gross fann income. On balance, the seasonal current account deficit
was $5,173.
During 1986 farmers have been organised via their union, the
Federated Farmers, to protest to the government and to urban New
Zealanders that farmers are suffering both financially and in terms of
morale.
For farmers, the 1986 coincidence of poliCies and prices
severely threatened their livelihood and the farm itself as equity was
eroded. Their protest has focused on key problem areas in the economy,
such as the
exchange rate, inflation,
government spending,
and
unbalanced policy.
Farmers appealed to government for some kind of
softening of policy, and for even application of policies to all
sectors of the economy. On Wednesday 30 April 1986 a large group of
farmers and rural people marched on parliament to protest against
government policies. Early in 1986 there was little sophistication to
the farmers' argument and few new ideas which represented a viable path
between the perceived extremes of new and Old policy.
Government's
response has been to advocate that farming has to operate on a sound
business basis like any other business, and not receive special
support.
Implicit in government policy is the view that structural
adJustments are necessary in which profitable commodities are produced
instead of unprofitable commodities.
This policy implies that new
areas for investment are required.
1.4
Farming Strategy and Structural Change
One element of the contemporary crisis in agriculture is the
general management strategy of farmers. Of particular relevance is the
logic of management strategy, that is, what the long-term goal of
farming is to the farmer. It is the general goal which, for example,
provides an orientation to the option of borrowing for development.
6
SOffle recent overseas research finds two broad strategies:
one of
'intensification' and one of 'extensification' or enlargement (Ploeg,
19~5).
The 'intensification' strategy avoids purchased inputs and
seeks productivity increases per unit of
input by pursuing the
"cra ftsmanshi p" of producti on.
Product; on ; ncreases are gai ned by
knowledge applied to management and day to day work.
The farmer
attempts to preserve independence and self sufficiency. In contrast,
the enlargement
strategy
involves delegating
work
tasks
and
coorainatlng fal~m management via market relations.
The farm is
developed and expanded in size and scale by adjusting to evolving
economic conditions.
Ploeg found that both strategies can lead to
increased production, and in Italy at least, the enlargement strategy
was predominant among contemporary dairy farms.
It is possible that both strategies exist among farmers in New
Zealand.
Obviously, the enlargement strategy has been popular between
1951 and 1971 when there was a rapid decline in the number of farms.
Enlargement may be still important after 1971 on pastoral farms which
have tended to increase in size. We may have at present two groups,
one of which tends to follow the intensification pattern and another
group which tends to follow the enlargement pattern.
The latter
strategy would have predisposed farmers to take on developments and
then suffer as returns were not sufficient to pay back development and
The former strategy, if it has been adopted in New
borrowing costs.
Zealand, would mean that there is a group of farmers better able to
survive the current economic changes largely because of their past
management strategy.
It remains to be seen whether these
two
strategies have been operational in New Zealand and if they have been,
to what extent each has been adopted.
Somewnat similar dichotomies of farmers have been found in the
US associated with different cultural groups. For example, Salamon
(19H5) finds that farms in a German ethnic group are smaller and more
diversified than a group of Yankee farmers. The former group are
motivated to replicate the family farm and farming goals, whereas
Yankee farmers are driven by entrepreneurial motives and tend to
develop crop monocultures.
Flora and Stitz (1985) prOduced similar
findings for these two ethnic groups, but while German origin was a
good proxy for yeoman farming, US-born farmers were not necessarily
entrepreneurs.
Even Briti sh research reports generally simil ar types
of farmers' strategies. A detailed study of 400 Scottish farms between
the 1978/79 and 1982/83 seasons (Wagstaff, 1985) finds many farms in
the high performance category were low input farms and that high input
use appears to result in small and uncertain gains in terms of unit
cost. While this research is on a different tack to that which
includes ethnic background, it does show that there can be two
strategies in overall farm management, and that the 'intensification'
strategy can be economically viable.
The above literature indicates that there are at least two
general approaches to farming management. These strategies may be
related to the degree of financial stress farmers have faced. Looking
at farmers' responses in terms of intensification or extensification
would be useful in understanding farm management.
uther research has focused on individual farmers' responses to
changed crop economies, and examined the implications of these changes
for farm structure at the aggregate level. For example, Gladwin and
Zaba~"a (1984)
studied farmers who faced a major decline in commodity
7
price for tobacco and looked at the overall changes in the pattern of
agricultural development.
For these Florida farmers, tobacco was 65
percent of the value of total agricultural production.
The study
focused on the decision to cut back production and on the decision on
how to cut back production. Relevant to NZ conditions is the finding
that some tobacco producers diversified into nursery crops and tomatoes
because these crops required management similar to tobacco production.
However, high capital requirements and changing markets led to many
failures in these new commodities. Out of 51 farmers, 19 became
larger, 11 became smaller and part-time operations, nine left farming
and Ii retired. Over the years following the first year of low tobacco
prices, the full-time farms became larger operations with larger gross
sales, net farm income and assets, and also larger debts and debt/asset
ratios.
Part-time farmers, by adopting a conservative strategy,
maintained a greater share of assets.
The structural changes in the county derived from individual
farmers ' responses to changed crop economies. The findings showed that
fan"ers had to get bigger, get off-farm work, or get out of farming,
responses which have been quite typical of many farm structure
adjUstments in the US. These responses fit in with the growing dual
structure of US agriculture where the few remaining full-time farms
produce most of the total agricultural production.
Barlett
(1984)
found different
responses
in
another
county-level study of farmers response to drought and increasing
debts. Results from a survey and from interviews showed that there
were three types of farmers. First, and least affected by economic
changes, were retired and disabled small-scale farmers most of whom had
not borrowed money. Second was a group of part-time farmers on larger
farms who work 40 hours per week off-farm. Both the first and second
group accounted for 56 percent of all farms, owned 30 percent of all
land, and while some of them lost savings and income from drought few
faced bankruptcy. The third group were full-time farmers with farms at
283 hectares on average, about five times larger than the first or
secona group.
Most of those full-time farmers had some off-farm
However, 37 percent were in serious financial trOUble with
income.
debts greater than 75 percent of assets.
I
The farmers in this county had a number of strategies to
with drought and low prices. These strategies and who undertook
are listed below:
1.
2.
3.
4.
5.
6.
cope
them
Increase area operated (mostly full-time farmers - 42 percent)
Decrease area operated (many, mostly retired/disabled - 38
percent)
Increase hirea labour (few, some full-time farmers)
Decrease hired labour (about one third of all farmers)
Increase off farm work (all, most full-time farmers - 29
percent)
Use irrigation (most full-time farmers - 46 percent)
Other adjustments included renting land rather than buying land,
during the adjustment period there were very few land sales.
and
Barlett argues that the family farm will survive better than
other types in the current phase of farm structure change in the county
8
studied. Of the full-time farms, it is the renters and the large scale
farms with more than 50 percent hired labour who were going bankrupt.
These two types had the greatest debts and had been in farming for less
time than the full-time family farms which owned most of their land.
Thus for Barlett, the farm crisis will not necessary weed out the best
managers but select farmers who established early.
It is clear from the above research that the structural
implications of farmers reactions to financial crisis are ambiguous.
One study reports that family farms must get big, get off-farm work, or
get out of farming. Other research shows that established family farms
with less than 50 percent hired labour and who have not borrowed to
develop are the survivors of the financial squeeze.
The findings
reflect a major divide in the theoretical literature over the long~term
prospects for family farms. One viewpoint has it that family farms
will be subordinated to capital and take on the characteristics of
industrial production based on wage labour. The other viewpoint argues
that the household labour characteristic of family farms provides
greater scope for survival.
The
~esearch
Problem
There is only a small amount of factual information on farmer's
responses to economic restructuring and changes in NZ agriculture as a
whole. There are opinions about possible changes in NZ agriculture.
For example, Neil Taylor of the New Zealand Meat and Wool Boards'
Economic Service (1986b) suggests that there may be increases in farm
size, increased corporate ownership, and more extensive management
Taylor sees little
farming (i.e., decreased inputs and outputs).
option for diversification within traditional agriculture because of
lack of management
skills,
physical
limitations,
high
capital
requirements, and market uncertainty. He sees more opportunities in
the area of new products and new markets. This view is shared by Mr
Moyle (1986), the Minister for Agriculture and Fisheries, who sees the
problem as one of under-marketing of existing produce.
Pessimism regarding change is also recorded in the t4AF Advisory
Services Division survey of sheep and beef farmers. They find that
where diversification into horticulture has occured, both decreased
and hi gh interest rates
on money borrowed
for
product pri ces
diversification are weakening the financial base of the whole farm.
The Advisory Services Division also states that farmers are adopting
the following short-term survival tactics:
1.
2.
3.
4.
5.
6.
sale of capital stock, plant or machinery
non-replacement of plant and machinery
sale of farm timber
sale of part of farm
seek i ng off-farm work by farmer or spouse
reducing labour
Longer-term tactics included increasing crop area, reducing
sheep numbers in favour of cattle, and changing to all wool farming.
The Oivision found that farmer morale was low, and with an uncertain
environment combined with high levels of stress, there was little
forward planning.
9
A more optimistic view of the future can be gained from the
results of John Pryde's 1985 farmer opinion survey (Pryde and McCartin,
19~6).
In response to a question on whether they were currently
intending to set aside some part of their farm for the development of
activities other than the type of farming they were presently involved
in, about one third replied in the affirmative. Of these, 32 percent
nominated goat farming, 25 percent horticulture, 15 percent deer
farming, and ten percent trees. Thus, at least some farmers appear to
have the resources to undertake changes in production.
At the present time we lack an informed view on two key aspects
of restructuring
in agriculture.
The
first area concerns
the
individual responses of farmers. An important part of this research
would include study of farmers perception of new agricultural policy
and to document in general terms their responses to economic change.
The second area concerns the collective response of farmers, that is,
the changes in primary production as a whole.
The sum of all
individual changes influence the overall structure of agriculture. The
present reseach addresses the first of these issues and seeks to
analyse farmers ' responses to economic change. The above literature
review suggests that farmers can make a variety of responses to
economic change and that these responses may be associated with
different types of management strategy. The remaining task is to
present up to date data on restructuring.
Following the methods
chapter, survey data are presented and analysed in order to provide a
description of contemporary adjustments and responses. Finally, the
results are discussed in terms of the need for extended analysis of the
data and additional research on farm structure, and in terms of
understanding farming strategy in the New Zealand context.
I
CHAPTER 2
IvlETHOD
2.1
Introduction
The general objective of the empirical research was to learn
about pastoral farmers' responses to economic change in 1986.
The
survey was designed to give an indication, in two se"lected regions, of
how farmers saw government policy, their own situation. and what they
were aoing in order to adjust to the financial downturn in primary
production.
This chapter outlines tile method used and presents data
relevant to an evaluation of that method.
2.2
The Questionnaire, Sample, and Response Rate
A seventeen page questionnaire was prepared in booklet style
containing a four paragraph, introductory letter requesting assistance
(see Appendix 1). Respondents answered questions by writing a number
in a box, or by writing an occasional comment. Questions covered seven
topics, namely:
farm information, approach to farming, government
policy. financial situation, coping strategies, assistance needed, and
The questions sought
to describe
farmers'
farmer information.
situations and their responses to the financial downturn. In addition,
the questions sought to address the issue of intensification and
extensification, and approach to farming.
Rather than a comprehensive survey based on a sample from all
New Lealand farmers, the author. in consultation with the Ministry of
Agriculture and Fisheries, decided to focus on two specific counties.
Hurunui and Clutha counties were selected because they represented
pastoral agriculture and because they both had a large number of farms.
Both counties have a clear majority of sheep-beef farms.
Hurunui
County is north of Rangiora and includes Loburn, Amberley. Waikari. and
Hawarden.
Clutha County is south of Balclutha and includes Clinton.
Owaka and Chaslands.
The sampling frame was the June 1986 Valuation Department list
of all holdings in each county. The list excluded residential land,
forestry land, and the residual category of "other" land.
From the
list of 2,217 cases a one third sequential sample was taken yielding a
sample of 739 cases. The questionnaire was posted on the 5th August
1986 and a reminder card posted on the 22nd August 1986. Most replies
were received by September.
From the 739 questionnaires mailed out a total of 426 replies
were received.
This number returned represents an unadjusted response
rate of 5H percent.
There were 384 usable responses giving a final
response
rate of 53 percent.'
The presence of 22 incompleted
questionnaires reflects the fact that the questionnaires were sent to
all holdings listed regardless of size. Many of these 22 cases were on
1
Of tne 739 questionnaires mailed out there were 15 returned by
the Post Office as "gone no address" and five returned with a
note that the original occupier had either moved or sold their
land. Taking these 20 cases off the original 739 leaves 719 of
which 426 is a 53 percent response rate. From the remaining
questionnaires received 22 were sent back incompleted because
the respondents considered them to be irrelevant.
11
12
sloallholaings or were retired from farming. For the remainder of this
report the results are based on the replies received from the 384
usable questionnaires.
The Valuation Department records provide a means to evaluate
repl ies in terms of full or part-time activity. More full-time farmers
replied than did part-time farmers, so that the response rate from full
time farmers was 60 percent.
2.3
Sample Representativeness
The 384 replies represent 17.3 percent of the total farm
population
for
Hurunui
and Clutha counties.
Past research
(Fairweatner, 1985) has shown that a 17 percent sample is sufficient to
be a representative sample for surveys of farmers. In addition, it is
possible to evaluate the representativeness of the sample by comparing
it with known standards.
In this case some characteristics of the
sample are compared with the Agricultural statistics for 1984. Table 1
shows farm type in terms of number and area for both counties.
The
data shows that the distribution of farm types is similar for both sets
of data.
It is reasonable to conclude that the survey sample is
representative of the population for Hurunui and Clutha counties.
Table 1
Comparison of Farm Type Using Agricultural Statistics
Data and Survey Data
Survey
%
No.
Area
(hectares)
Agricultural Statistics
No. %
Area
(hectares)
HURUNUI
Horticulture
Dai ry
Sheep/l:3eef
Arable
Other
11
4
139
15
19
6
2
74
8
10
14
64
447
134
18
28
16
645
44
114
3
2
76
5
13
45
412
80
1288
Total
188
100
345
847
99
492
Dai ry
Sheep/l:3eef
Arable/horticulture
Other
7
162
5
4
4
91
3
1
95
335
234
94
28
649
17
44
4
88
2
6
88
300
254
1267
Total
178
99
318
738
100
349
11
Clutha
13
Table 2 shows the patterns of farm size distribution for each
county for the same two sources of data. Again, there ;s general
similarity in the distributions. The two tables indicate that the
sample is representative.
Table 2
Comparison of Farm Size Distribution Using Agricultural
Statistics Data and Survey Data
HURUNUI
CLUTHA
%
Size Range
(hectares)
< 5
Survey
11
5-9
10-19
20-39
40-59
60-99
100-199
200'*399
400-799
800 ... 1199
1200-1999
2000-3999
> 4000
2.4
%
Agr.Stats. ' 84
7
7
9
4
8
7
9
7
10
6
8
13
13
16
11
6
5
19
10
1
1
5
2
1
Survey
2
3
4
1
1
6
22
Agr.Stats. ' 84
2
3
4
4
3
7
23
41
15
3
1
36
12
1
1
2
2
1
Limitations of the Method
There are tnree limitations to the method. First, the survey
provides information from one point in time, namely August and
September 1986.
The method does not provide direct information on
changes in attitude or response to a questionnaire over time. However,
to some extent this problem can be mitigated by attempting to learn
about the fundamental qualities of the respondents which are unlikely
to change over time. Second, the questionnaire is not suitable for
studying detailed aspects of farmers responses to economic change.
For example, only summary data are available on financial situation.
The objective of the research was to cover all major aspects of
farmers
responses in order to give a comprehensive overview of their
situation rather than detailed information on specific issues.
I
I
The third limitation relates to the generality of the findings.
The two selected counties have about 2000
farms but there
are
approximately 60,000 farms nationally. Thus, on a statistical basis
the results may not be generalisable to New Zealand primary production
However, both counties have a clear majority of pastoral
in general.
farms, and they may, to some extent, be taken to represent pastoral
farming.
It seems likely that, in general terms, pastoral farmers in
Hurunui and Clutha counties will respond to economic changes in ways
similar to pastoral farmers elsewhere.
CHAPTER 3
RESULTS
3.1
Introduction
The primary source of data is the questionnaire survey and the
following presentation of results is based on this source.
Each
section below begins with a summary of the main findings in that
section.
The
initial objective is
to describe
the
general
characteristics of the respondents and to build up a profile of the
"typical" farmer.
3.2
General Characteristics of All Respondents
A number of questions focused on general farm information, and
taken together
they give a description
of the typical
farmer
respondent.
I n summary. most of the respondents are full-ti me,
sheep-beef farmers on a farm of 381 hectares on average.
They are
owner-operators with financial control of the farm, and on average.
they are 44 years old. The farms are typically freehold and organised
as individual ownerships or partnerships. The farms are just as likely
to have unpaid family workers as paid farm workers or managers.
The average size of farm for all respondents was 326 hectares,
with a mode of 16 hectares and a median 199 hectares.
These data
reflect the relatively large number of smal1holdings included in the
With respect to type of farm, Table 1 (see earlier)
sampling frame.
shows that most respondents (82 per cent for both counties) have
sheep/beef farms and there are small proportions of all other types of
farm. The average size of sheep/beef farm is 381 hectares, with 35 or
nine per cent of these being high or hill country grazing farms, and
277 or 7L per cent of these being fattening farms.
Most respondents (69 per cent) were full-time farmers and seven
per cent were part-time farmers, defined in the questionnaire as
deriving most income from their farm. The remaining category was
smallfarming, deriving most income from off their farm, and this
category was the second 1argest at 21 per cent. Generally. the resu'\ ts
reflect the wide range of farm sizes and types included in the sampling
frame but clearly show that the typical respondent is a full .. time
farmer. Thus, most respondents (at least 57 percent and probably more)
are full-time, sheep/beef farmers.
Other data show that 78 per cent of all respondents said their
occupation was farmer. Other occupations were professional (three per
cent), self-employed (six per cent), and wage earner (eight per cent).
Regarding prior occupations 28 percent said they had always been a
farmer, 23 per cent said they had been farm labourers, and 13 per cent
said wage-earners.
Most respondents (89 per cent) said they were
owner-operators and 91 per cent said they had control over the
financial management of the farm. The average age was 44 years, mostly
men responded (92 per cent), and they had operated their present farm
for 14 years on average. Respondents had been farming for 21 years on
average, a'lthough there is a large group who said they had been farming
for 10 years.
Thus, the typical respondent is a male farmer of 44
years with financial control over an owner-operator unit.
15
16
Some other information is available on the farm itself. Almost
all land is freehold tenure and held as either individual ownership (33
percent) or as a partnership (46 percent). This proportion shows more
partnerships than the national figures based on the agricultural census
(47 percent and 39 percent respectively for 1985) and suggests that the
pastoral sector is among the leading sectors which are making the
change from individual ownership to partnerships. Other survey data
show that dairy, arable and grazing farms have about equal individual
ana partnership ownership, whereas fattening
(the majority)
and
horticulture have more partnerships than individual ownership.
In the last five years 164 respondents (43 per cent) bought or
sold land, with most of this group (121) buying land. The average size
of land Dought was 214 hectares, (modal and median size 80 hectares).
while the average size of land sold was 409 hectares (modal and median
size 60 hectares).
Thus, most of the land transactions involved
purchases of about 80 hectares, typically added on to sheep/beef farms
with an average size of 381 hectares. It;s probable that some of the
units of land bought are the same as those sold because the sizes are
similar.
In addition, national farm size data show a trend of
declining numbers in the 40 to 200 hectare range, and the addition of
80 hectares to farms of 381 hectares fits this general trend.
There is some data on farm work organisation.
While most
respondents are owner-operators, there are 26 per cent who say that
there are two people who dO the physical work on the farm. This number
corrODorates the point noted above that there were a significant number
(46 per cent) in partnerships. The fact that more people say they are
in partnerships than work as two owner-operators suggests that some of
the p~rtnerships are with spouses who do not usually do physical work
on the fan".
There are 141 or 37 per cent of the total number of
respondents who said they had one or more unpaid family workers.
There were very few private lessees or sharefarmers. However,
there were 68 ( ten per cent) paid farm workers, nine ( two per cent)
paid farm managers, and 57 (15 per cent) paid family workers making a
total of 134 (35 per cent) paid employees.
Since in most cases
respondents who selected these paid worker categories said they
employed one person, it is likely that 134 farms employ one person on
average.
As noted above, there is an approximately equal number of
unpaid family workers.
Finally. some county comparisons are available. Table 3 shows
some differences in extent of farming activity for each county.
Also
full time farmers are larger in Hurunui county, while part-time farmers
are larger in Clutha county. There are more part-time, small farm or
retired farmers in Hurunui county than in Clutha county, and comparing
full-time farmers, versus non full-time farmers for both counties
produces a significant Chi-square at the 0.01 significance level.
These findings are explained by the greater proportion (30 per cent) of
businesspersons, professionals, self-employed or wage earners in
Hurunui county compared with eight per cent in Clutha county. Hurunui
county is close to Christchurch which means that there is a greater
proportion of non-pastoral farms occupied by a range of people with
non-farm occupations.
17
Table 3
Number and Size of Farm by Extent of Farming and County
Hurunui
Full-time
Part-time
Small farmer/Retired
Other
Total
No Response
Clutha
Sign. Level
115
524 ha
143
375 ha
14
58 ha
158 ha
52
22 ha
21
33 ha
7
375 Ha
122 Ha
188
345 ha
178
318
*
11
**
3
t1a
18
384
In the following analysis data from all respondents is used and
these data are taken to represent the "typical" farmer described above.
Where the type of farm or farmer is relevant then the data are broken
down accordingly.
Of immediate concern now ;s the financial situation
of the respondents.
3.3
Financial Situation
In summary, 71 per cent of respondents said their financial
situation was worse than last year. One third of respondents had a
deficit of -$15,000 and two-thirds had an average surplus of $20,000.
Typically, gross income had declined by $22,000 since the previous
financial year.
Twenty per cent were in a difficult or crlS1S
situation whereas 40 per cent were in a sound position. Debts derived
from refinancing existing debt and from development expenditure.
All
respondents were asked to describe their financial
situation and compare it with their last financial year (i.e.,
1984/85). Seventy-one per cent said it was worse than their last year,
21 percent said about the same as their last year, and six per cent
said it was better than their last year. In addition, respondents were
asked to
describe in approximate
terms their current financial
situation for the 1985/86 year. Table 4 shows a summary of financial
situation and includes data specifically for full-time farmers and for
sheep/beef farmers. The deficit and surplus figures are averages and
show the number of respondents in each situation. Fewer respondents
provided these data.
18
The table shows that full-time farmers had lower off-farm
income and higher figures for all the other categories when compared
However, the net result in terms of either
with all respondents.
deficit or surplus was much the same. The higher off-farm income for
all respondents reflects the higher proportion of non full-time farmers
with significant off-farm income in this group.
Table 4
Approximate Financial Situation
All Respondents
(n = 240)
$
Farm Income
1985/86
Full-Time
(n = 197)
$
Sheep/Beef
(n ::: 118)
$
81,255
106,537
84,993
Off-Farm Income 14,150
5,117
8,760
Gross Income
93,602
113.620
95,774
Total Cash
Expenditure
90,470
110,166
92,769
Deficit
Surplus
-16,292(61,41%)
-15.962(62,39;r~)
22,411(88,59%)
20,779(99,62%)
108,000 (298)
140,000 (216)
113,000 (254)
86,000 (283)
111 ,000 (206)
89,000 (243)
-15,612(71,36%)
20.293 (125,64%)
"Round Figures"
Gross Income
84/85
Gross Income
85/86
Difference
22,000
29,000
24,000
The sheep/beef group has lower fann income than the full-time
group, possibly reflecting better financial conditions for the latter
type of farm.
However, the figures for the sheep/beef group are quite
similar to the all respondents group.
Regardless of group, the table shows that just over one-third
of respondents were in a deficit situation to the extent of about
$15,000 on average. The maximum deficit was stated as -$70,000 and 22
out of the 71 cases (36 per cent) were at or below -$20,000. The most
frequent deficit figure was -$10,000. The table also shows that just
under two-thirdS of responaents were in a surplus situation to the
extent of about $20,000 on average. The maximum surplus was $100,000
and 49 out of the 125 cases (39 per cent) were at or above $20,000.
The most frequent surplus figures were $10,000 and $20,000 (ten each).
19
In general, the data show a wide spread of financial situations
most respondents in a surplus situation.
with
Table 4 also shows respondents statements of gross income in
round figures for the last two financial years. These data are a check
on the accuracy of the specific figures and they show similar levels of
gross income.
Typically, gross income has declined by about $22,000,
and by up to $29,OUU for full-time farmers. A gross income for 1985/86
equal to 1984/85 would have left most respondents in a surplus
situation. Surpluses would have ranged from $5,000 to $40,000.
I
Other data are available which
gave an opportunity for
respondents to express how they perceive their financial situation.
Table 5 shows the relevant data for all respondents.
Table 5
Respondents ' Statement of Financial Situation
No.
%
Sound positlon, no need to make
significant adjustments
147
39
Delicate position, can hold on
with minor adjustments
152
40
Difficult situation, have to make
some major adjuSDTIents
64
17
Crisis situation, may not survive
12
3
375
99
No Response
Total
9
384
The first category reflects a sound financial situation, and it is
suprising that there are 147 cases here when there are 125 in Table 4
who have a surplus, regardless of size. However, not all respondents
replied to the questions on which Table 4 data is based. Table 5 also
shows that an equally large number (152) are in a delicate financial
situation, and some degree of major change is required for 20 per cent
of all responednts, with three per cent thinking that they may not
survive.
While the above data give an overview of respondents financial
situation, there is some additional data on financial factors that
contributed to their current financial situation. Table 6 shows the
areas for borrowing over the last two years. Most respondents (29 per
cent) selected refinancing existing debt as their largest area of
20
borrowing and many (21 per cent) selected development. These two areas
accounted for half of all the cases, with remaining responses spread
Thus, respondents· financial
evenly over the other five options.
troubles have not occured suddenly but are to a large extent a product
of earlier debt situations.
Table 6
Largest Area of Borrowing in Last Two Years
No.
%
Land
25
14
Building
16
9
Livestock
16
9
Plant and Machinery
22
12
Refinancing
52
29
Development
38
21
Other
12
7
181
165
101
Did not borrow
No Response
Total
38
384
Two other points conclude this section on financial situation.
For those respondents with a cash deficit, most (44 per cent) said they
will try to finance their deficit through their traditional financier
such as a bank or a stock agent. Thirteen per cent mentioned the Rural
Bank discount scheme and 17 per cent mentioned off-farm work by
themselves or their spouses. However, while the focus of the responses
was on negative aspects of financial situation, there was optimism for
tne future presumably from those who were in a sound position.
There
were 153 (41 per cent) who stated that they believe they will have a
cash surplus over the next five years, and this is more than the 77 (21
per cent) who answered in the negative. This latter number roughly
equates with the 69 in Table 5 who are in a difficult or crisis
situation.
It is clear from the above data, despite being an overview of
financial situation, that a significant proportion of respondents were
in a serious financial situation in August and September of 1986.
be argued that
some respondents may have
been
While it can
over-reacting and exaggerated the description of their situation, it is
equally likely
that
some respondents
would knowingly or
even
21
unknowingly understate their situation. On balance the data give a
reasonable indication of how difficult farmers were finding the 1986/87
financial year. The next section goes on to consider what farmers are
doing in response to their financial situation.
3.4
Farmers' Responses to Economic Change
In summary, 65 per cent of respondents are unl ikely to change
their management strategy while 32 per cent are inclined to change or
adJust management strategy.
Twenty-eight per cent have
already
developed new land uses, typically deer, goats and trees. Adjustments
to management include a low input policy, hiring less labour and using
more unpaid family labour. However, some respondents have increased
stock or increased area cropped. Forty-two per cent have the same or
higher expenditure
and 58 per cent have decreased expenditure.
Off-farm investment will increase.
The issue of response to economic downturn involves attitude to
all respondents choose to classify
change.
Table 7 shows how
themselves with respect to ch~nging their farm management situation.
Table 7
Preferred Management Strategy
No.
I have to change and diversify into
new types of production
I have to change and adj ust my
present farming system
I have no choice but to stay with my
present farming system
t,1y present farmi ng system is qui te
adequate
I have to look for ways out of farming
No Response
%
30
8
91
24
149
40
92
25
14
4
101
8
384
l'lost respondents (40 per cent) say they have no choice regarding
changing management strategies while one quarter say their farming
system is adequate. These two groups, accounting for 65 per cent of
all respondents, are unlikely to change their management strategy.
However, about one third are inclined to change although,fQr most of
these respondents i t is an adjustment rather than div'ersification.
Finally, 14 respondents (4 per cent) say they have to l~av~' 'farming,
and this number is higher than those who said they were in a crisis
financial situation in Table 5 above.
22
Some questions focused on new land uses actually undertaken or
intended. Some respondents (28 per cent) have already undertaken a new
type of land use or new management system. Typically. about 20 per
cent of their farm has been developed with this change, and most of
these respondents expect a return from the new land use in about six
months.
Most (66 per cent) of this group said that undertaking
development did not contribute to their financial downturn while 28 per
cent said it did, and the remainder were unsure.
Table 8 shows the types of new land uses undertaken or
intended.
Deer, goats, and trees are the most popular types of
development already undertaken. The average deer herd size is 58 and
the average goat herd size is 80, but in both cases the distribution of
sizes is broad. However, the most popular land uses intended are trees
and horticulture.
Table 8
New Land Uses Undertaken or Intended
Undertaken
No.
%
Intended
%
No.
Deer
19
22
8
12
Goats
16
18
5
7
Trees
12
14
19
28
Horti cul ture
6
7
12
18
Cropping
5
6
2
3
29
33
22
32
87
100
68
316
100
Other
No Response
297
384
384
In addition to making adjustments to land uses, farmers can
adjust their management strategies in other ways. At the time of
survey. respondents could either have only considered or else adopted a
wide range of management strategies. Table 9 lists 13 management
options ana indicates which are most popular as indicated by all
respondents.
The adopted column shows that respondents had preferred
to adopt a low input policy (64 per cent), hire less labour (33 per
cent), and use more unpaid family labour (31 per cent).
Typically
respondents cut back on obvious expenditure items. An equal proportion
had either increased stock (21 per cent) or decreased stock (22 per
cent) and income had been sought by off-farm work (19 per cent) or sale
of assets (16 per cent). The table shows that each measure had already
been undertaken by many respondents although many of the options were
still under consideration by about ten per cent of all respondents.
Increasing
farm
size was the most popular item still
under
consideration.
23
Table 9
~~anagement
Strategies Considered or Adopted 2
Considered
%
No.
Adopted
%
No.
Total
No.
%
A low input policy
48
12
245
64
257
67
Increase farm size
66
17
19
5
85
22
Decrease farm size
40
10
15
4
55
14
Increase crop area
40
10
48
12
88
23
Decrease crop area
26
7
28
7
54
14
Hire more labour
23
6
5
1
28
7
Hire less labour
32
8
125
33
157
41
Off-farm work
44
12
72
19
116
30
Use more unpaid family 1abour
26
7
120
31
146
38
Buy irrigation or other
technology
19
5
12
3
31
8
Sell stock, plant, machinery,
trees
30
8
62
16
92
24
Increase stock carried
24
6
79
21
103
27
Decrease stock carried
43
11
86
22
29
34
It is interesting to note that adjustment to management
strategy includes increasing size or scale of operation.
As many
respondents had increased farm size, crop area and stock carried as had
decreased farm size, crop area
and stock carried.
While most
respondents sought to recoup income there were some who purchased
technology
or hired more labour
and appeared to expand their
enterprise. It seems that financial pressure induces both cutbacks and
expansion, albeit to a limited extent.
Cutting back expenditure is a popular response to financial
downturn, as indicated above. Table 10 shows the extent to which total
capital expenditure on plant, machinery, and fences etc. has changed
over the 1985/86 financial year. The table shows that 42 per cent have
the same or higher expenditure while 58 per cent have decreased
expenditure.
Some of those respondents with the same expenditure as
last year may have had a low level of expenditure for both years.
2
Table percentages do not add up to 100 per cent because
frequently
more than one option
was selected by
respondent.
quite
each
24
Table 10
Extent of Change in Total Capital Expenditure
No.
%
More tnan last year
18
5
Equal to 1ast year
132
37
Decreased by up to $10,000
100
28
Decreased by $10 - $20,000
59
17
Decreased by $20 - $30,000
18
5
Decreased by $30 - $50,000
20
6
Decreased by over $50,000
7
2
354
30
100
No Response
384
Most expenditure cutbacks were less than or equal to $10,000, but 17
per cent of all respondents have cut back from $20,000 to $30,000.
Other data show that for those who did cut back, it was mostly in the
area of fertiliser, and plant and machinery expenses. As the data in
Table 9 indicate there are a small number of respondents who have
adjusted to economic change by increasing expenditure.
The last topic to consider is what impact all the above changes
in management have on future investment patterns. Table 11 shows the
extent of future on-farm and off-farm investment for the 171 or 44
percent who anticipate a cash surplus over the next five years. In the
table it is assumed that what is not invested on-farm is invested
off-farm.
The data shows a fairly even distribution, with 35 per cent
investing more than half of their surplus off-farm, of which 15 per
cent will invest all of their surplus off-farm. Of those considering
off-farm investment 60 per cent say that this will increase in amount
and 33 per cent say it will stay the same.
25
Table 11
Distribution of Future Investments
No.
%
All on farm
34
20
Over half on farm
38
22
Exactly half on farm
39
23
Less than half on farm
34
20
None on
26
15
171
213
100
farm
No Response
384
3.5
General Attitudes
In summary, respondents blame government and processors for the
farming recession
although one-fifth
support government
policy.
Respondents believe government policy is unfair and want greater
government intervention in the economy. Respondents want recognition
and practical help rather than coping skills training, and remarkably
few appear to want financial or technical information. They see a
trend towards marketing and financial sophistication and believe meat
processing and marketing should change.
The results presented so far have given a description of the
"typical" respondent and then described both financial situation and
responses to it. The financial data can be supplemented by describing
a range of general respondent attitudes.
These attitudes provide
insight into the situation as farmers see it and provide some depth of
understanding to farmers· responses to economic change.
The first area of study is the cause of farming recession.
Table 12 shows a list of ten groups of people and the importance
respondents attached to each group as the cause of farming recession.
The rows across shows the percentage of all respondents who considered
that group as either very important (VI), important (1), neutral (N),
unimportant (Un, or very unimportant (VUI). The number in parentheses
is the sum of the adJacent figures and indicates where most of the
respondents rank that particular group. The question was answered by
363 or 94 per cent of respondents.
26
Table 12
Importance of People as Cause of Recession
%
VI
I
N
Farmer politicians
15
26 (55)
29 (55) 24
6
Processors-management (1)
40 (85) 45
11
4
0
Processors-marketing (1)
38 (80) 42
16
4
1
Processors-labour (3)
52 (79) 27
9
8
5
Independent marketers
13
38
12
3
Past government (4)
26 (75) 39
18
14
3
34
(72 )
UI
VUI
Overseas farmers (2)
9
32 (59)
27
23
8
New Zealand farmers
14
27 ( 51)
24
23
12
Overseas governments (2 )
26 (70) 44
15
10
5
Present government (3)
59 (83) 24
7
5
5
The table shows that nearly all groups are given considerable
However, present government and all three sub~groups of
importance.
processors are seen as most important. In contrast, overseas farmers,
New Zealand farmers, and independent marketing are seen as important or
neutral.
All classes, except farmer
polit;cans, have a skewed
distribution to the very important end of the continuum.
Clearly.
there ;s ambivalence in attitude to farmer politicians.
The results in Table 12 obscure how respondents evaluate
specific clusters of groups. While most groups are seen as important
it is possible that some respondents would select only one or two
groups as important.
By presenting the data for all respondents
together these differences are cancelled out. Factor analysis is a
suitable method for locating specific clusters of groups which are seen
to be related as to a cause of recession. On Table 12 there are
numbers from one to four next to some of the groups, and like numbers
link up groups which were associated as important.
The
first
association links both management and marketing of processors.
Some
farmers obvi ously look to meat and dai ry company admi ni strators, for
example, as a major cause of farming recession. The second association
expresses a concern that it is overseas farmers and governments that
are the cause of recession. The third association blames unions and
government, while the last association blames the past government.
27
These factor analysis data show face validity with four fairly
obvious areas for ascribing the cause of farming recession.
This
finding in itself may not be directly useful, but it does show the
heterogeneity of belief among respondents. Questions on the importance
of 13 factors, as opposed to people, as the cause of farming recession
produced similar findings in that all factors were ranked as important.
Factor analysis ayain produced four associations but these did not
appear to be informative.
In general, the data on the farmers view of cause of the
farming recession can aid in appreciating how farmers see economic
restructuring.
The data do not contribute to evaluating what are the
actual causes of recession.
I
Other attitudinal questions focused on government policy.
While most respondents (68 percent) disapproved of government policy,
there was a core of 21 per cent who did approve. On the topic of
economic goals, respondents gave their ranking of importance and their
view of government's ranking of importance. For 'decreasing the budget
deficit' and 'increasing economic performance ' the two sets of rankings
were similar.
However, 'decreasing inflation ' and 'making agriculture
economi ca lly sound were approved of more by farmers than what they
These
results
suggest that
thought government would approve.
respondents do not believe that the government is entirely sincere when
it says reducing inflation and strengthening agriculture are important.
I
Respondents ' main complaint about government policy is that it
has been unfair.
Most respondents (gO
per cent) say that the
government has not been even-handed in its restructuring of the
economy.
The outcome of government policy is seen as leading to low
incomes and a struggle to survive for 40 per cent of respondents, while
24 per cent see a gradual rundown. In contrast, the remaining 24
percent see government policy leading to long-term strength
and
stability.
As an alternative to present policy, 30 per cent want a
greater economic role (e.g., managed float, interest rate control), 22
per cent want distortions removed, and 16 per cent want a more
even-handed policy.
Almost two-thirdS (60 per cent) agree that
government policy is deliberately hurting farmers.
The data on attitudes to government policy show general
group of respondents
disapproval, even though a small
support
government policy. Respondents believe that the policy is unfair and
they feel that they are being victimised.
The questionnaire included a variety of questions on assistance
and information needs.
Table 13 shows the importance of a number of
types of assistance, and for these data there is clearer discrimination
than in earlier tables using the five point importance scale.
The
table shows that most respondents rank the following as important:
financial advice, recognition of the problems facing farmers, and
change in government policy. Of these first three it is recognition
that is ranked most important.
Of lesser importance are long term
loans and general information for survival. Ranked as fairly neutral
are stress management, short-term loans, and retraining. These data
reflect the belief respondents have that their situation is poorly
understood by other people. They would favour assistance that is
directly related to the farm operation rather than assistance related
to themse 1ve s •
2H
Table 13
Importance of Types of Assistance
VI
I
%
N
UI
VUI
Financial advice
38 (81) 43
12
5
2
Recognition
48 (88) 40
8
4
0
Stress management
10
25 (5Y) 34 ( 57) 23
8
Short term loans
18
38 ( 57) 19
17
7
Change in government policy
54 (81 ) 27
13
5
2
Long term loans
27 (63) 36
18
5
4
General information for
survival
25 (62) 37
16
14
3
25 (57) 32
22
Training for new occupation
3
11
Some respondents expressed specific interest in financial and
technical information. Of the 174 (45 percent) who made a statement,
most wanted information on commodity prices (lamb, mutton, beef),
financial rates (inflation, wage, interest), and on farm budgeting. It
is noteworthy that 210 respondents (55 per cent) made no requests and
14 respondents (4 per cent) said no financial information was required.
Fewer respondents (123 or 32 percent) requested technical information.
Of those that did, most wanted information on marketing requirements,
soil testing or fertilisers, and animal or crop health. On the subject
of payment for information most respondents (52 per cent) would pay
less than $20 per hour.
There remain a number of questions which cover the general
attitudes to changes in agriculture. One question focused on how
respondents saw the future of New Zealand agriculture and horticulture
over the next ten years. Table 14 tabulates the major observations
volunteered by 139 (36 per cent) of respondents.
29
Table 14
Directions of Change in Next Ten Years
No.
%
Increased financial sophistication,
professional, commercial
21
15
More market related, market research,
processing
47
34
Increased specialisation, intensity
14
10
Increased flexibility. diversification
13
9
8
6
24
17
Reversion of land
5
4
Increased farmer control
7
5
139
100
Increased processing efficiency
Decrease family farm, changes in ownershi p,
decrease population
The most popular view (34 per cent) is that the future would De market
related and not product related with emphasis on marketing research and
processing.
There was also emphasis given to increasing financial
sophistication (12 per cent) and increased specialisation (15 per
cent). For those respondents who did contribute a response it is clear
that they are responding to some of the current trends in farm business
operation and see these as dominant over the next ten years. There;s
also a group of 17 per cent who chose to emphasise some of the possible
consequences of current trenas. namely the demise of family farms, or
changes in ownership and rural population.
Views on marketing are also
available for the issue of
processing and marketing farmers' products. TaDle 15 shows respondents
attitudes to the degree of change in organisation they think is
required for meat, wool and crops. In general, there is approval that
meat marketing and processing is in need of an overhaul, but there is
satisfaction with wool and crops although nearly half would like minor
changes. In addition, other results show that most respondents (77 per
cent) Deneve that it is very important that farmers and processors
produce specialised products rather than basic, raw commodities. Many
respondents (30 per cent) believe that this is very important for wool
and crops.
The above data indicate that respondents have quite strong
views about the role of marketing, although it is difficult to judge if
this is a genuine indicator of marketing attitudes or a response to low
product prices.
30
Table 15
Degree of Change Desired for Processing and Marketing
Meat
%
No.
Present organisation satisfactory
Wool
No. %
Crops
%
No.
20
6
151
41
51
20
nor changes needed
49
13
174
48
115
45
Basic overhaul needed
296
81
40
11
89
35
365
19
100
No reply
365
19
100
255
129
100
t~i
384
384
384
The presentation of data on respondents' general attitudes show
that there are a range of positions adopted on the issues explored.
There are always some dissenters from the general view, and in some
cases the attitudes to a given topic are quite broadly represented.
3.6
Approach to Farming
The data presented in all the above sections of this chapter
give some idea of how farmers have responded to economic changes. The
data are mostly descriptive and do not provide insight into the
management strategies which underlie farmers' responses.
In the
approach to farming is
following section, data on respondents'
presented in order to improve our understanding of management strategy
and motivation for farming.
In summary, the analyses show that there are four approaches to
management strategy.
The Fi nanci al Manager emphasi ses market pri ces
and careful planning, the Productivity Increaser emphasises increasing
production and size, the Individualistic Worker emphasises practical
farm work, and the Lifestyle Farmer emphasises non-financial reward and
the craft of farm work.
There are three types of motivation for
farming:
Outdoors Way of Life, Status in Land, and Satisfying
Independent
Income.
The literature on intensification and extensification discussed
in Chapter 1 was used to prepare thirteen statements about management
strategies.
Respondents stated their level of agreement with each
statement and the set of statements was scored by 375 or 98 percent of
respondents.
Table 16 shows the percentage who selected each of five
categories for each statement, with the five categories running from
31
strongly agree to strongly disagree. The table lists the key words
from each statement, for which a full version of each statement can be
found in Appendix 1.
Table 16
Level of Agreement With Management Statements
%
SA
N
A
o
So
Farm work is a craft
l3 (73)
50
11
12
4
Increase production/
1aDour unit
38 (87)
49
5
6
1
6
32
35
10
Increase size farm
operation
7
(67)
Control over work
29 (78)
49
12
9
1
Farming is a business
48 (91)
43
5
3
1
Non-financial rewara
28 (73)
45
7
13
7
Efficient farm work
24 (72)
48
15
12
1
Can pay to use contractors
31 (91)
60
6
2
1
Increasing production/area
25 (65)
40
20
12
3
Attention to market prices
37 (91)
54
7
1
o
Minimise dependence
16
51
20
13
1
Decreasing total costs of
production
24 (74)
50
14
10
2
Planning and financial
management
33 (78)
45
13
8
o
(71)
The table shows that respondents generally agreed with all
statements except for increasing size of farm, and there was only
slight agreement for minimising dependence. Three statements attract
strong agreement and these are: 'farming is a business', 'can pay to
use contractors', and 'attention to market prices'. It is only the
first of these that most respondents strongly agree with, the other two
having most respondents registering only agreement. All the remaining
statements have high levels of either strongly agree or agree, but
production per labour unit is favoured ahead of the others and
production per area favoured slightly less than the others.
32
As in the earlier presentation of data with five pOint scales,
it is quite likely that the overall results mask patterns of preferance
among specific groups of respondents. For example, it is possible that
only some of those agreeing with 'farming is a business', would also
agree with 'attention to market prices', that is, the particular way
that business is pursued. There may be two quite distinct groups of
respondents each agreeing with one of these statements and some others
but not Doth.
It would be relevant to learn if groups did exist and
what combinations of statements they agreed with.
Factor analysis, using principal
components and
varimax
rotation,
yields four factors derived
from the 13
management
statements.
These factors show which statements are related to each
other and represent an underlying construct which particular groups
have identified with. After the nature of the factors is understood it
is possible to consider what groups of respondents are associated with
the factors.
Table 17 shows a matrix indicating the relationship
between each factor and each management statement.
The table is
interpreted by locating the high factor scores (typically those above
0.4) and by locating negative scores.
Table 17
Factor Scores for Each Management Statement
Factor 1
Factor 2
Factor 3
Factor 4
Craft
0.1
0.0
0.4
0.4
Production/labour
0.4
Size
*
0.4
*
0.2
0.0
0.0
0.4
*
0.1
-0.1
Work
0.0
0.1
0.6
Business
0.4
0.3
0.1
0.0
Reward
0.0
-0.1
-0.1
0.4
Efficient work
0.0
0.1
0.5
Contractors
0.4
0.1
-0.1
0.2
Production/area
0.1
0.1
0.0
tl\arket
0.5
0.2
0.1
0.1
Dependence
0.1
0.0
0.4
Costs
0.4
*
-0.2
0.1
0.0
Planning
0.4
*
0.1
0.1
-0.1
*
*
*
0.7
*
*
*
*
*
*
0.0
0.0
-0.2
*
33
Factor 1 represents an emphasis on financial management and
markets.
The highest score is associated with market prices, and high
scores associated with production per labour unit, business, using
contractors, decreasing costs of production, and planning and financial
management.
(See Table 12 for a brief description of each management
variable). There are no negative factor scores. Factor one emphasises
many management variables, including efficiencies in the use of labour
and an emphasis on decreasing costs of production by responding to
changes in economic conditions.
Responsiveness to market signals
occurs in two of the management variables and there is little interest
in increasing farm size or increasing production per unit area.
The
qualities of factor 1 suggest a label of "Financial Management".
high score for
increasing
Factor 2 has a particularly
prOduction on existing area, and high scores for production per labour
unit, and increasing size. There is a modest score for farming as a
business and a negative score for both decreasing costs in response to
the marKet, and for non~financial reward. Factor 2 shares the interest
in production and business that is evident in factor 1 but contrasts in
some important ways.
First, increasing farm size and increasing
production per area are more important in factor 2 than in factor 1.
Second, factor 2 registers disagreement with decreasing costs of
production and responding to changes in economic conditions. On this
latter point, factor 2 does not agree with the importance of market
prices as does factor 1. The qualities of factor 2 suggest the label
of "Product; vi ty Increase".
Factor 3 has its high scores for control over farm work and for
efficient and properly executed farm work. There are high scores for
farm work as a craft and minimising dependence, with negative scores
for non-financial reward and contracting.
Factor 3 gives little
attention to management, production, or markets and most attention to
In addition, there is a concern
to
preserve
physical
work.
independence and to avoid using contractors. These qualities suggest
the label of "Individualistic Work".
Finally, factor 4 has a high score for farm work as a craft and
for non-financial reward in doing farm work well. There are negative
scores for minimising dependence, planning and financial management,
and increasing size.
For factor 4 there is little recognition of
farming as a business, which all of the other three factors recorded,
and little
interest in production
and management.
The
strong
disagreement with minimising dependence
suggests that factor 4
identifies with other businesses and is very likely a hobbyist or
part-time farmer.
The qualities of factor 4 suggest the label
"Lifestyle Farming",
The above presentation describes four constructs which the
factor analysis method found underlay the
responses to the
13
management questions. Also of interest is the question of groupings of
respondents who, 1n turn, underlie the four constructs.
It is
logically possible that all respondents gave a similar response to the
13 variables and gave similar scores to the specific variables which
generated the factors. However, this is unlikely because each factor
emphasises different aspects of management, and in some cases the
factors have opposite scores for a given variable. Thus, the differing
scores for some variables show that there must be subgroups among
respondents.
Some respondents scored variables in a similar way to
form a group with similar attitudes to management, and these attitudes
would be different from those in another group.
34
One way to examine subgroups is to select those respondents who
scored high on one factor and look at their scores on each of the
management variables. This methOd shows up the contrasts between each
subgroup.
Table 18 shows the spread of responses on the agreement
scale for each management variable and for each management type.
The
table shows how each subgroup ranked the management variables and thus
translates factor loadings into the actual agreement scores. It must
be noted that there is a small number of respondents who load on more
than one factor and their scores will be used in more than one type as
shown in Table 18. This number is typically small and does not distort
the main findings. TaDle 18 includes asterisks to show which variable
received a high score for that particular factor and thus includes the
essential paints of Table 17.
The table shows that high factor loadings correspond with
maximum numbers in the strongly agree option. For example, Factor 1
has the highest loading on market prices and for the group of 70
respondents who are identified by Factor 1 there are 62 who strongly
agree and eight who agree. Almost all other high loadings have most
respondents in the strongly agree column. The other pOint about Table
1~ is that
the numbers in either of the agree, neutral or disagree
columns can indicate a level of disagreement. This occurs because the
five point scale really indicates relative not absolute level of
agreement.
In some of the factors where there is a negative factor
loading there are still quite a few respondents in the agree column.
This situation reflects the fact that most respondents tended to agree
Thus. a position near neutral can indicate a
with all variables.
significant distance away from agreement.
Table 18 also fleshes out some of the comparisons across
factors and shows patterns of scores which are not highlighted by Table
17. For prOduction per labour unit there is a modest level of
agreement by factor 3 but there is not a significant factor 1oadi ng.
This variable is not effective at discriminating between factors. For
lincrease size l most of the Factor 1 respondents disagree as do most of
Factor 3 respondents.
But this variable is gOOd for distinguishing
Factor 1 from Factor 2.
In addition to the study of types of management there is the
topic of motivation for farming. The questionnaire included nine
motivation questions asking for a rating of importance. Table 19 shows
how these statements were ranked by all respondents.
Table 18
Level of Agreement for Each Factor and for Each Management Statement
Financial Manager
SD
DNA SA
Craft
1
Production
6
7
32
22
1
1
14
54 **
Productivity Increaser
SD
DNA SA
7
0
6 32
23
1
1
2
20
40 **
1
1 20
56 **
0
1
1
19
42
2
4
21 **
4 16
22
11
10
10
10
22
27
3
7
1
7 24
Work
1
8
7
27
26
2
5
6 35
30
1
9
2
1 17
57
60 **
Li festyl e Farmer
SD
10
Size
Business
Individualistic Worker
SO
0 N A SA
25
5 59***
*
1
2
1
16
43
7 12
15
14
26
1
10
53 **
N
A
SA
16
24***
2
12
21
12
11
3
4
1
19
18
1·
11
26
11
30***
11
20
12
30
11
8
14
2
17
22
2
4-ve
Reward
7
10
1
28
23
12
7
2
26
30
\~ork
2
13
5
22
27
1
10
10
26
30
20
50 **
1
2
3
36
36
2
1
4
39
18~ve
12
34
-
13
65***
1
7 11
23
32
4(3
2
27
35
6
32
25 **
1
12
14
8
3 11
28
21
2
8
6
18
6
7
18
31
1
11
5
17
5-ve
Contractors
Production
3
9 12
t·1arket
8
Dependence
Costs
1
4 16
25
24
2
19
49 **
19
51 **
Planning
n =
Notes:
***
**
*
-ve
2
62***
3
70
highest factor loading
factor loading 0.4 or over
factor leading of 0.2 or 0.3
negative factor loading
1 27
16
14
29
18
15
10
22
25-ve
7
11
18
41
n
= 78
1
8
n = 64
1
1
4
4
4
3
n = 42
*
7...;.ve
w
(J1
36
Table 19
Level of Importance of Motivation Statements
%
SA
A
N
D
SD
A source of income
58
(93)
35
4
3
0
A way of 1ife
39
(89)
!:iO
7
2
0
Outdoor/close to nature
25
( 70)
45
17
8
4
Opportunity for leisure
11
33 (54) 21 (42) 21
14
Accumulating capital
12
41 (65) 24
Standing in community
2
Own boss
35
Family job opportunities
18
Fulfillment/satisfaction
55
(83)
(94)
9
24
48
10
16
34 (66)
7
32
6
1
31 (55) 24 (44) 20
7
39
8
4
2
In Table 19 there is a variety of responses to the motivation
questions, and while most receive strong agreement there are some that
receive disagreement. Most agreement is recorded for source of income,
way of life, and fulfillment/satisfaction. There is agreement with own
boss and outdoor/close to nature and di sagreement wi th' standi ng in
community.
Factor analysis yields three factors and the factor matrix is
shown in Table 20. Factor 1 shows that way of life, outdoors. leisure
and fulfilment are related. There is disagreement with both income and
accumulating capital. The key points for Factor 1 reflect satisfaction
with the 1ifestyl e associ ated wi th farmi ng. These attri butes suggest
the label of "Outdoors Way of Life".
Factor 2 has a very high score for standing in the community
and high scores for accumulating capital and job opportunities for
family. There are no negative scores. The common element for factor 2
is status derived from owning land, and it is the land and its
associated way of life that can provide job opportunities for onels
family. An appropriate label for Factor 2 is "Status in Land". Factor
3 gives a high score to source of income, fulfilment, and own boss.
Factor 2 gave some emphasis to income but for Factor 3 it is most
important.
Similarly, more emphasis is given by Factor 3 to the own
boss motivation.
An appropriate label for Factor 3 is "Satisfying
Independent Income".
37
As shown earlier the factor analysis results can be displayed
in terms of each subgroup·s scoring on each motivation variable. Table
21 shows the relevant data.
Table 20
Factor Scores for Each t"1oti va ti on Statement
Factor 1
Income
-0.2
Factor 2
Factor 3
0.2
0.5 *
Way of 1He
0.6 *
0.0
0.2
Outdoors
0.7 *
0.0
0.0
Leisure
0.5 *
0.2
0.0
-0.1
0.5 *
0.2
Standing
0.2
0.8 *
0.0
Own boss
0.1
0.2
0.4 *
JOD opportunities
0.1
0.4 *
0.2
Fulfilment
0.4 *
0.0
0.5 *
Capital
In summary, the analysis of farming strategy and tnotivation for
farming yield some interesting results. The first finding is that
apparently homogeneous populations can be
analysed in terms of
subgroups as i dentif.i ed by factor ana lys is. Members of each subgroup
tend to have a similar approach to either management or motivation.
Each subgroup has representatives who
closely match the general
characteristics of the factor, and there will be others who do not fit
so closely.
Some of these cases will also have attributes in common
with the remaining factors. While factor analysis accounts for most of
the cases in the sample there remain a residual number who do not fit
on any factor.
In addition to the evidence derived from factor
analysis, there is a gOOd
indication that the interpretations are
valid from the Obvious face validity of the results.
The analysis shows that each factor analysis construct reflects
attributes held by subgroups of the population. It is quite acceptable
to label each subgroup with the identifying construct label.
For
example, the first group for the analysis of management strategy can be
called the
IIFinancial I~anagerll.
Finally,
the analysis of each
sUbgroup·s scores on each variable
shows how subgroups can be
distinguished from one other.
Table 21
Level of Importance for Each Factor and for Each Motivation Statement
- - - - - - - - - - _ ... -
Outdoors Way of Life
VI
VU U N I
Income
1
5
5
35
34-ve
3 77 **
Way of 1ife
Outdoors
SatlsfYlng Independent
Income
VU
VI
U
N
I
Status in Land
VU
N
I
U
VI
2
50
6
40
24
1
2 15
36
4 10
7 18
15
3 16
18
12
68***
1
6 10
35
21
2
Leisure
5
6
10
31
28 **
3
9
15
34
12
Capi ta 1
11
14
21
23
10-ve
1
2
5
42
23 **
Standing
17
27
22
8
6
33
22
8***
Own boss
1
5
6
30
37
4
31
37
Job opportunity
3 13
17
26
21
3 12
26
32
14
66
4
27
42
Ful filment
*
n = 80
i~otes:
*** highest factor loading
** factor loading of 0.5 or over
* factor loading of 0.4
-ve negative factor loading
52 **
23
n = 73
16
*
11
4 10
27
2
14
7
10
27
w
co
13
3
1 13
40
8 13
24
*
54***
n = 54
CHAPTER 4
SUMMARY AND CONCLUSION
4.1
Introduction
The present chapter provides a summary of the main findings and
undertakes a brief discussion. The main point made is that there is a
variety of responses to economic change even when there is a general
pattern of similar behaviour among all respondents.
The overall
responses found in the present survey of Hurunui and Clutha counties
parallels those responses reported elsewhere. The results provide a
preliminary evaluation of the impacts of restructuring in agriculture
and suggest in what ways future research may be undertaken.
4.2
Summary of
f~ain
Findings
The sample was shown to be a reasonable representation of all
farmers in Hurunui and C1 utha counti es. The typical respondent was
male, 44 years old, and had direct control of financial management.
Most respondents had full-time, sheep/beef farms. About one third were
in a financial deficit situation of about $15,000 on average, although
there is a wide range in the distribution. Twenty percent say that
they have to make a major adjustment to their financial situation and
one third say that they need to change and adjust their management
strategy.
While only eight percent were seeking to diversify, there
were 28 percent who have already undertaken new land uses.
The most common response to economic change was a low input
policy, supplemented with decreasing labour and increasing unpaid
family labour. However, despite these general trends, some respondents
were increasing the scale of their farm operation. Expenditure was cut
back by up to $10,000 on average and future off-farm investment is to
increase.
There were four subgroups of respondents on the issue of
causes of farming recession and while most respondents disapproved of
government policy there were 20 percent who did approve.
Generally,
respondents wanted recognition, financial
advice, and change in
government policy.
Most respondents appear not to want financial or
technical advice from fvlAF, and most see the future of primary
production as being dominated by market related issues. Meat marketing
and processing was seen as in need of change.
Fi na-l1y, the factor ana1ysi s of management strategy and farmi ng
motivation yielded four and three types respectively.
There are
significant differences between types of farmer for both strategy and
motivation variables.
The -label s for the management strategy types
are: Financial
Manager, Productivity
Increaser,
Individualistic
Worker, and Lifestyle Farmer. The labels for the motivation types are:
Outdoors Way-of-Life, Status in Land, and Satisfying Independent
Income.
39
40
4.3
General Implications of the Findings
The main implication from the results is that understanding
responses to economic change in terms of single trends overlooks the
diversity inherent in any group of people. While it is true that there
is a general pattern of cut back in expenditure or disapproval with
government policy for example, on both these issues there is a small
group with the directly opposite response.
The
second point is that
the results provide
general
confi nnation of the exi sting indications of farmers
responses to
economic change. The results support those ideas expressed by the Meat
and Wool Boards ' Economic Service and the MAF. The data presented in
this report provide precise indications of how farmers have responded
to economic change.
I
The presence of different types of management strategy raises
interesting questions.
Do different types have different chances of
survlvlng in future? Do the current more-market policies mean that the
Financial r,1anager and the Lifestyle Farmer are best equipped to survive
- the former by virtue of compatibility with the current business ethos
and the latter by virtue of alternative sources of income?
Should
rural or agricultural policy pay attention to the indictions in this
report that there are di fferent types of farmers?
Do the different types of farmer represent a historical
succession of approaches to farm management? It is likely that the
Individualistic Worker was dominant in the pioneering days of farm
establishment.
The Productivity Increaser would appear to fit in with
the post World War II policy of increasing production, and the
Financial Manager could be the latest version in this historical
succession.
The Lifestyle Farmer may have always had a role in New
Zealand farming history, although it is possible that this type is a
The
product of current the increase in the numDer of smallholders.
current analysis of management strategy is suggestive of a sequence of
management styles.
4.4
Future Research
At present the existing data are incompletely analysed.
The
present report focuses on an overview and a description of farmers
responses and there needs to be further analysis of the data.
The
following topics are possible areas for future research:
I
1.
Analysis of management type. One objective is to use all
ava i 1ab 1e data to test the val i dity of the factor i nterpretati ons and
refine our understanding of the differences between types. This line
of inquiry could show up any differences in how each management type
has responded in terms of management strategies considered or adopted,
or what, if any, are their differences in attitudes to government
policy and information needs.
2.
Analysis of management strategies considered or adopted in
order to see if there are underlying patterns of response.
3.
Looking for any differences in full-time farmers versus
non-full time farmers. Further analysis of different groups in the
samp"'e as identified by the type of farm or extent of farming.
41
4.
To extend the research to other farm types. It would
necessary to survey horticulture, dairy and crop farmers in order
see if the salile approaches to management strategy exist.
be
to
5.
To examine the usefulness and validity of the four farmer
types by interviewing farmers in order to deepen understanding of
management strategy.
Other needed research includes analysis of farm structure
changes within the two counties. The sampling frame used in this
research provides a detailed account of all farms within Hurunui and
Clutha counties. These data can be updated in future and the data from
each point in time compared in order to describe how the total number
of each type of farm is changing. This analysis would provide very
accurate data on farm structure change, and would be useful for any
consideration of long-term strategies or policies concerning primary
production.
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LJ (1984) Farm Foreclosure Moratorium Legislation:
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A Lesson
Atwood, EA (1983) Financing and Investment in Irish Agriculture.
Banking Review (Dec):13-26.
Irish
AtwoOd, EA (1984) The New Zealand Farm Business and the Current Changes
in its Structure. AERU Discussion Paper No. 87.
Barlett, PF (1984) Microdynamics of Debt, Drought, and Default in South
Georgia.
American
Journal
Agricultural
Economics
66 (5) : 836-843.
MK
(1981) The Economic Benefits of Enterprise
Bartholomaeus,
Diversification and Specialization with Group
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Bulletin, Department of Agricultural Economics and
Agr.Econ.
Business t~anagement, University of New Englana, No.24.
Beck,
AJ; Dent, JB (1984) An Analysis of Production, Consumption and
Borrowing Behaviour in the North Island Hill Country Pastoral
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Cochrane, WW (1985) The Need to Rethink Agricultural Policy in General
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American Journal of Agricultural
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67(5):1002-1009.
Fairweather, JR (1985) Farm Enlargement in New Zealand., AERU Research
Report No. 166.
Flora,
JL;
Stitz,
JM
(1985)
Ethnicity,
Persistence,
and
Capitalization of Agriculture in the Great Plains During the
A Wheat Production and Risk Avoidance.
Settlement Period:
Rural Sociology 50(2):341-360.
Friedmann, H (1978) World Markets, State and Family Farm: The Social
Bases of Household Production in an Era of Wage Labour. Compo
Studies in Soc. & History 20(3):545-586.
Friedmann, H (1980) Household Production and the National Economy:
Concepts for the Analysis of Agrarian Formations. J Peasant
Studies 7(2);158-184.
Gladwin,
CH; Zabawa, R (1984) 1'1icrodynamics of Contraction Decisions:
A Cognitive Approach to Structural Change. ~nerican Journal
Agricultural Economics 66(5):829-835.
Greer,
JP (1982) Motivation and Other Factors Influencing the Adoption
of Practices by Sheep Farmers in Oxford County, New Zealand.
Unpublished M.Agr.Sci. Thesis, Lincoln College.
43
44
Hillman,
JS [ed] (1984) United States Agricultural Policy 1985 and
Beyond. A Series of Department of Agr. Econ. & Resources for
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Koning, NBJ (1983) Family Farms and Industrial Capitalism.
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Kooten, GC van; Arthur, LM (1985) An Empirical Investigation of
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Some
Consequences
of
the
New
Lee
JE
(1983)
Agri culture
MAF
(1986) Farm Monitoring Report:
Marsden,
TK;
Symes, DJ (1984) Landownership and Farm Organisation:
Evolution and Change in a Capitalist Agricultural Region.
of Urban
and Regional
Research
Journal
International
8(3):388-401.
Moyle,
C (1986) Address to Public Meeting,
Wednesday 2 April 1986.
New
Zealand Meat and Wool Boards' Economic Service (1986) and
(1987) Movements in Sheep and Beef Farm Input Prices.
Paper
Nos. 1931 and 1962.
New
Zealand Meat and Wool Boards' Economic Service (1986) Trends in
Farm Incomes, Production and Finance in the Sheep and Beef
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New
Zealand Meat and Wool Boards' Economic Service (1987) A Review
of Farm Incomes, and Current Financial Trends in the New
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Nix,
J (1985) Managing Farms in Time of Contraction. Study, Farm
Management Unit, Department of Agriculture and Horticulture,
and Department of Agricultural
Economics and Management,
University of Reading No.6.
Ploeg,
JD van der (1985) Patterns of Farming Logic; Structuration of
Labour and Impact of Externalization: Changing Dairy Farming
in Northern Italy. Sociologia Ruralis 25:5-25.
Pryde,
JG;
McCartin, PJ (1986) Survey of New Zealand Farmer
Intentions and Opinions, October-December, 1985. AERU Research
Report.
Salamon,
S (1985) Ethnic Communities and the Structure of Agriculture.
Rural Sociology 50(3):322-340.
Sheep and Beef.
Reality
Farm
in
US
Wellington.
Avonhead School
Hall,
Schwab, J (1985) The Farm Credit Crisis in Iowa.
Oakdale, Iowa,
Legislati¥e Extended Assistance Group, Institute of Urban and
Regional Research, University of Iowa. OAE Order No. 84-5.
45
Schuh,
E (1986) Strategic Issues
in
Economic Impact:
A Quarterly
53 (1 ) : 6-13.
Smith,
GS;
Musser, WN; White, FC (1984) An Analysis of the Effects
of Farm Size and Expansion
Decisions on the
Financial
Conditions of Farm Firms in South Georgia. Research bulletin
College of Agriculture Experiment Stations, University of
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of Agriculture
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(1985-86)
International
Agriculture.
Review of World Economics
Report of the
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the Sneep and Beef Industry 1986. New Zealand r~eat and Wool
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Taylor, NW (1986b) The Importance of Agriculture to the New
Economy.
New Zealand ~leat and Wool Boards' Econolilic
Paper No. 1948.
UK
Economist
(1985)
296(7411):15.
Elephant-High
Urban,
TN
(1985) A New Soci a 1
Agribusiness 1(2):129-136.
Farm
Debts.
Contract with
Rural
Zealand
Service
Economist
America.
Wagstaff, H (1985) Variations in Input Use and Performance on Scottish
Farms. 1978/79 - 1~83/84. Farm Business Outlook 18:19-28.
Walston,
0; Roberts., J (1985) US Farm Bankruptcies.
UK 102(23):87-90.
Farmers Weekly,
APPENDIX 1
THE QUESTIONNAIRE
AGRICULTURAL ECONOMICS RESEARCH UNIT
LINCOLN COLLEGE, CANTERBURY
July 1986
Dear Farmer,
I am aware that the farming industry is in a severe recession.
This year is seeing major changes in primary production in New Zealand
\I/ith farmers and the rural community seriously affected.
I need your help to document what is happening to all types of
farmers and to learn how farmers are responding to economic changes.
It is important that the people influenced by government policies have
a chance to speak. Some of my colleagues say that farmers won't fill
out a comprehensive questionnnaire like this one. I think they will.
Many farmers are hard pressed at present but I think they will want to
let others know how they are dOing, especially right now. Big problems
require a comprehensive questionnaire.
This questionnaire is one way for policy makers to hear from
farmers. The questions ask for information and opinion with only a few
detailed business questions. I assure you that all answers will be
confidential to me.
Please fill out the questionnaire at your earliest convenience,
and post it to me (free of charge) as soon as possible.
It is
important to the success of this research that many people respond
promptl y. Thi s way we can accurately 1earn about ~impact of current
economic changes.
Thank you for your assistance.
Yours sincerely
John Fairweather (Ph.D.)
Research Sociologist
Postal and telegraphic address: AE R U, Lincoln College, Canterbury, New Zealand
Telephone Christchurch 252 811
FARMER QUESTIONNAIRE - HURUNUI AND CLUTHA COUNTIES
NB:
This questionnaire
acti vity.
is
for all farmers regardless
of size or
FARI.., INFORMATION
1.
Tne total area of farm land you own or operate
(in your county) is:
(1 acre
2.
=
approx. 0.4 hectares)
hectares
What is tile extent of your farming activity? Are you a:
(Please insert number in box)
Full-time farmer (1)
Part-time farmer (typically most income from
your farm) (2)
Small farmer or hobbyist (with most income from
off - farm) ( 3 )
Retired or semi-retired farmer (4)
Employee of government department (5)
Employee of an organisation or business other than
government department (6)
Other (7) Please Specify
D
----------------------
3.
Your main occupation is:
Farmer (1)
Businessman (2)
Professional (3)
Self-employed (4)
Wage-earner (5)
Other (6) Please Specify
4.
D
----------------------
Your farm is mainly:
Horticultural (1)
Dairying (2)
Fattening (fat lambs, beef, and stock breeding) (3)
Arable (cash cropping with some stock) (4)
Grazing (store sheep and cattle, with limited fattening
only) ;- High Country (5)
Hill Country (6)
Specialist Livestock (poultry, horses, kennels etc) (7)
Other (8)
Pl ease Speci fy
---------------------1
D
5.
In the last five years you have:
~ought
some farm land
Area in hectares
Sol d some farm 1and
Area in hectares
~-----I
~----I
Not bought or sold farm land, please tick
6.
You operate your farm land as:
One farm (1)
Three separate farms (3)
7.
Two separate farms (2)
More than 3 separate farms
(4)
For most of your farm land the tenure is:
Freehold (including mortgaged freehold) (1)
Crown 1ease (2)
Private lease (3)
Otller lease (4)
Ottler (5) Please Specify
D
------------
8.
D
For most of your farm land the ownership is:
Individual (1)
Partnership (2)
Special partnership (3)
Private Company (4)
Public Company (5)
Co-Operative (6)
Government or Local Body (7)
Trust (8)
Other (9) Please Specify
D
-------------
9.
Please state the number of people who do the physical work
on your farm
No. of People
Owner operator
Private lessee
Sl'larefarmer
Paid farm worker
Paid farm manager
Unpa i d family worker
Paid family worker
2
10.
The financial management on your farm is controlled by
Owner operator (1)
Private lessee (2)
Sharefarmer (3)
Paid farm worker (4)
Paid farm manager (5)
Unpaid family worker (6)
Paid family worker (7)
Other (8) Please Specify
D
------------------
YOUR APPROACH TO FARMING
1.
Please state your level of agreement for each of the following
statements about farming
1 Strongly agree
4 = Disagree
2
5
Agree
3 = Neutral
Strongly disagree
Farm work is essentially a craft
Farm income is best improved by improving production per labour
unit and by skilful and knowledgeable management
It is important to me to increase the size of my farm operation
A farmer must try to maintain personal control over all work
operations
Farming is essentially a business operation
There is a non-financial reward in doing farm work well
Efficient and properly executed farm work out on the farm is
the most significant part of running a farm
There are times when it pays to get work done by expert
contractors
Increasing production on my existing farm area is an important
goal
It is important to pay close attention to market prices
As a farmer I try to minimise my dependence on other businesses
Farm income is best improved by decreasing total cost of
production and responding to changed economic conditions
Planning and financial management are the most significant
parts of running a farm
3
2.
To what extent do you use each of
practices
Never used (1)
Occasionally use (3)
the
following
business
Have considered using (2)
Find essential to use (4)
Futures markets ego wool futures, wheat futures
Professional financial management
Forecasting market trends
Gross margins
Budgets and cash flows
3.
In the past, your farm development pol icy has been to
Maintain credit, adopt a cautious approach to borrowing
and keep total debt low (1)
Borrow for development and take on
debts (2)
Other (3)
4.
0
Please specify - - - - - - - If you were asked "What is your aim in farming", how would you
rate each of the following?
1
4
=
=
Very Important
Unimportant
2
5
Important
3
Very Unimportant
=
=
=
Neutral
A source of income
A way of 1 ife
An outdoor life close to nature
Some opportunity for leisure
A means of accumulating capital
A standing in the community
A job as one's own boss
A means of providing job opportunities for ones' family
A job that offers fulfilment and/or satisfaction
4
How would you
farmi ng is
5.
OOIl
Ii
II
6.
••
D
••••••••••••
•••••
ell.
&
••••
""
O
••
•••
II
OO.O
describe or define "farming".
•••••••••••••••••••••••••
(I." • • • •
It
0 ' . e It, • • • • • • • • • • • •
De
O
In your view
..............
••••
III
ee.
II
IIID
ell
"
••••••
••••••••
Is it possible for farming to be like other businesses?
Fanning is definitely not like other businesses (1)
Some similarities between farming and other
businesses (2)
Essentially, farming is like any other business (3)
7.
0
o
For your situation, how much influence do you have over your
1 = Much influence
3
=
2
4
Little influence
=
=
Some influence
No influence
Physical environment (e.g. land, climate)
Economic environment (e.g. prices)
Political environment (e.g. government policies)
Social environment (e.g. local community)
8.
For your situation, what level of control do you have over your
farm's performance
High level of control (1)
Moderate level of control (2)
Low levelof control (3)
Little control (4)
No control (5)
9.
o
Your confidence in the farming industry is
At the Present
1
3
5
Very High
Neutral
= Very Low
=
=
2 = High
4
=
o
Low
5
For the Future
D
10.
In your oplnlon, what will NZ agriculture/horticulture be like
after ten years from now
D
Much the same as it has always been (1)
Changed in some important ways (2)
IF WE CHANGE, please state in what way ...............•.
GOVERNMENT POLICY
1.
In general, what level of approval do you have for government's
agricultural and rural policy
1
4
2.
=
=
Strongly Approve
Disapprove
2
5
Approve
3 = Neutral
= Strongly Disapprove
=
In your view how important to the government is each of the
following economic goals
1
4
=
=
Very Important
Unimportant
2
5
= Important
=
3
Very Unimportant
= Neutral
Reduce inflation
Decrease the budget deficit
Improve economic performance via structural changes in
the economy
Make agriculture economically sound
3.
D
How important to you is each of these economic goals
1
4
=
=
Very Important
Unimportant
2 = Important
3 = Neutral
5 = Very Unimportant
Reduce inflation
Decrease the budget deficit
Improve economic performance via structural changes in
the economy
Make agriculture economically sound without needing
government assistance
6
4.
Do you feel that government has been even-handed on all
sectors in its restructuring of the economy?
Yes
5.
(1)
No (2)
D
Unsure (3)
In your oplnlon, the outcome of government1s economic
policy is liKely to
Lead to long-term (5 - 10 years) strength and stability
in agriculture (1)
Ruin agriculture (2)
Force fa rmers to accept low income and
struggle to survive (3)
Cause a gradual run-down of agriculture (4)
Other (5)
Please specify
D
-------------------------
6.
Please state briefly what alternative government agricultural
and rural policy you would like to see introduced
••••••••••••••••••••••••••••••••
7.
II
•••••••••••••
e
••••••••••••••••••••••• "
In your oplnlon, how important are each of the following people
as the cause of farming recession
1 = Very Important
4
2
5
= Unimportant
= Important
=
3
Very Unimportant
= Neutral
Farmer politicians
Processors (e.g. meat and dairy companies):A.
Management and administration
B.
Marketing personnel
C.
Unionised labour
Independent marketing people (eg. commodity traders)
Past government
Overseas fanners
New Zealand farmers
Overseas governments
Present Government
Otl1er, (please specify)
---------------------7
D
H.
Do you agree with tne claim that government policy
deliberately hurt farmers
1 :: Strongly Agree
4 :: Oisagree
9.
2 :: Agree
3 :: Neutral
5 :: Strongly disagree
In your oplnlon, how important are each of the
factors as the cause of the farm; ng recessron
1 :: Very Important
4 = Unimportant
is
to
D
following
3 :: Neutral
2 :: Important
5 = Very Unimportant
1. Low product prices
2. Past government policies
3. Present government policies
4. Oversupply of farm products
5. Overseas agricultural policies
6. Floating exchange rate
7. High value of the NZ dollar
8. High internal budget deficit
9. High interest rates
10. Removal of SMPs
11. High rate of inflation
12. Excessive government expenditure
13. Unfavourable terms of trade (external deficit)
14. Other, Plese specify
----------------------
YOUR CURRENT FINANCIAL SITUATION
1.
NB:
For the last financial year, your financial situation,
cash basis is
on a
cash basis = difference between all farm and personal income and
all farm and personal expenditure
Worse that last year (1)
About the same as last year (2)
Better than last year (3)
8
o
2.
Please state what your approximate financial situation is, on a
cash basis, for the 1985/86 financial year
(Approximate figures only)
Farm income
Off-farm income
Gross income
Total cash expenditure
Defi ci t/Surpl us
Do not have these figures
o
(please tick box)
FOR THOSE FARMERS WITH A CASH DEFICIT OR EXPECTING A CASH DEFICIT
From what main source wi 11 you try to fi nance thi s defi cit
Rural Bank discount scheme (1)
Traditional financier only (e.g. bank, stock agent) (2)
Family money (3)
Other government source (e.g. Social Welfare Dept) (4)
Off-farm work - spouse (5)
Off-farm work - yourself (6)
Sale of off-farm invesunents (7)
Off-farm investment income (8)
Sale of land (9)
Unsure (10)
Other (11) Please Specify
o
----------------------
3.
In the last two years what has been your largest area for
borrowing
Have not borrowed (1)
Additional Land (2)
New Building (3)
Li vestock (4)
New Plant and Machinery (5)
Refinancing existing debt (6)
Development (7)
Other (8), Please specify
D
----------------------
4.
How important to you are each of the following
1
4
=
=
Very Important
Unimportant
2
5
=
=
Important
3
Very Unimportant
Low product prices
Loss of equi ty
High interest rates
9
=
Neutral
5.
Please state in round figures your gross farm income for
each of the last two financial years
1984/85 $
1985/86 $
STRATEGIES TO COPE WITH ECONOMIC CHANGES
1.
B
At the present time, which of the following strategies best
descri bes your farm management si tuati on
-have to change and diversify into new types
of production (1)
I have to change and adjust my present farming
system (2)
I have no choice but to stay with my present
farming system (3)
My present farming system is quite adequate (4)
I have to look for ways out of farming (5)
I
2.
Have you already developed some or all of your farm in some new
type of 1and use or new management system
No
IF YES
D
Yes
(1)
o
(2)
- how much of your farm have you developed: percentage
,...-------1
- what is the new land use or management system
- in about how many months will there be a return
3.
5.
months
Has this development contributed to your financial downturn?
Yes
4.
'----'
(1)
No
(2)
Unsure
o
(3)
Any livestock other than sheep or cattle you have are:
,.-----j
Deer
Number of Deer
Goats
Number of Goats t - - - - ;
Other, Please specify
Number of Other" - - - - - I
Any new or non-tradition cash crops you have are:
Pl ease specify
-------------------------
Areac-i
Areac=J
10
6.
Are you currently intending to set aside part of your farmror
the development of activities other than the type of farming
you are presently involved in?
Yes
(1)
No (2)
IF YES, p"1 ease specify
7.
--------------------------
D
As a response to recent economic changes, which of the
following management strategies have you considered and which
have you adopted (Pleae tick the appropriate box)
Only Considered
Actually Adopted
A low input policy
Increase farm size
Decrease farm size
Increase area cropped
Decrease area cropped
Hired more labour
Hired less labour
Off-farm work
Used more unpaid family labour
Bought irrigation or other
technology
Sold stock, plant, machinery,
trees or other assets
Increase stock carried
Decreased stock carried
IF YOU HAVE CONSIDERED AND THEN REJECTED any of the above
management strategies, please say what ones and why
11
8.
Which statement best describes your present financial situation
Sound position, no need to make significant
adj ustments (1)
Delicate situation, can hold on with minor
adj ustments (2)
Difficult situation, have to make some major
adjustments (3)
Crisis situation, may not survive (4)
9.
D
FOR THOSE FARMERS NEEDING TO MAKE FINANCIAL ADJUSTMENTS
As a response to recent Government rural policy announcements,
which of the following refinancing options have you considered,
and which might you actually adopt
Have Considered
May Adopt
Adjustments to interest payments
Adjustment to principal repayments
Sale of land and then lease back
Sharefarming
Partnership formation
Farm rationalisation
(eg. pool machinery, merge farms)
Rural Bank Guarantee of seasonal
finance
Looking for ways out of farming
10.
11.
IF YOU HAVE CONSIDERED AND NOT BEEN ABLE TO ADOPT
any of the above options, please state what ones and why
Some of the above refinancing options involve equity sharing by
off-farm interests. What level of approval do you have for
this?
Strong Approval (1)
Disapprove (4)
Approval (2)
Neutral (3)
Strongly disapprove (5)
12
D
12.
By about how mucl1 has your total capital expenditure on plant,
mach; nery, fences etc. changed over th; s 1ast fi nanci al year
Is more than last year (1)
Is equal to last year (2)
Decreased $10,000 (3)
Decreased by $10,000 to $20,000 (4)
Decreased by $20,000 to $30,000 (5)
Decreased by $30,000 to $50,000 (6)
Decredsed by over $50,000 (7)
D
IF YOU HAVE CUT BACK ON FARM EXPENDITURE IN THIS YEAR,
please put the three numbers in the box in the correct
order of importance (most cut back to least cut back)
Repairs and Maintenance (1)
Plant and Machinery (2)
Fertiliser (3)
13.
Least
I~
Have you developed any new ideas or techniques which wi 11 hel p
you to survive
No (1)
If
14.
rvJost
Yes (2 )
yes, please specify
D
Do you believe that you will have a cash surplus from your
farm over the next five years
Yes
(1)
No
(2)
Unsure
(3)
D
IF YES how much will you invest on farm and how much will
you invest off farm
On Farm (percentage)
Off Farm (percentage)
15.
o
o
IF YES TO OFF-FARM INVESTMENT, this will
Increase in amount (i)
Stay the same (2)
Decrease in amount (3)
o
13
16.
Do you approve or disapprove of Federated Farmers response to
the fanning recession
Approve (I)
Disapprove (2)
D
Unsure (3)
IF DISAPPROVAL, what should Federated Farmers do to improve
their performance
17.
Can farmers work together to achieve common goals (ego in
buying inputs or selling products)
Yes
18.
(1)
No (2)
When it comes to processi n9 and marketi ng farmers products,
which of the following statements best describes your view for
meat, wool, and crops.
Meat
I
The present type of organisation is satisfactory (1)
With some minor changes the situation would be
satisfactory (2)
A basic overhaul is needed (3)
19.
D
Unsure (3)
D
Wool
D
Crops
D
How important is it that NZ farmers along with processors
produce specialised products rather than basic, raw commodities
Meat
1.
Very Important
2.
Important
3.
Neutral
4.
Unimportant
5.
Very Unimportant
D
Wool
0
Crops
0
14
20.
Some people believe that there should be more urban people and
more rural, non-farm businesses to give the rural economy more
strength.
In your opinion, how important are each of these
developments for your area
1.
2.
3.
4.
5.
Very Important
Important
Neutral
Unimportant
Very Unimportant
Non-farm businesses
D
Urban People
D
FARMER ASSISTANCE NEEDED
1.
For you as a farmer, how important are each of the following
types of assistance
1
4
Very Important
=
2
5
= Unimportant
Important
=
3
= Very Unimportant
Neutral
=
Financial advice
General recognition of the problems facing farmers
Stress management and counselling
Short-term loans/finance
Change in government policy
Long-term loans/finance
General information for survival strategy
Training for a new occupation
Other
Pl ease Specify
2.
------------------------
Please state what financial information you will need
In the next 6-12 months ............................. .
. . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. . . . . . . .. . . .
In the next 12-36 months ............................ .
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
15
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
.. •
•
•
•
•
•
eo • •
3.
Please state what technical information you will need
In the next 6-12 months ............................. .
8
..............
11
•••••••••••••••••
0
•••••••••••••••••••••
In the next 12-36 months ............................ .
4.
Please state what other information you will need in future
5.
To what level are you prepared to pay for both financial and
technical information?
Financial
Less than $20 per hour (1)
$20 - $40 per hour (2)
$40 - $80 per hour (3)
$80 - $100 per hour (4)
More than $100 per hour (5)
D
Technical
D
FARMER INFORMATION
years
1.
Your age is
2.
Your sex is:
3.
You have operated your present farm for ...
years
4.
You have been a farmer for ...
years
male (1)
female (2)
16
o
o
o
o
5.
Your occupation prior to your present position was
Sharefarmer (1)
Farm Manager (2)
Farm Labourer (3)
Shearer or contractor (4)
Always been a farmer (5)
Other business (6)
Professi nal (7)
Self-Employed (8)
Wage-earner (9)
Other (10) Please specify
o
-------------------------
You have completed the questionnaire. Thank you for taking
time out to tell me what you think. Please send the completed
questionnaire back to me in the stamped return envelope.
John Fairweather
17
RESEARCH REPORT
158.
The Optimal Location of Egg Production in New Zealand,
AC. Beck, J.P. Rathbun, C.D. Abbott, 1984.
175.
An Economic Survey of New Zealand Town Milk
Producers, 1983-84, R.G. Moffitt, 1985.
159.
The Economics of Irrigation Development of the Amuri
Plains Irrigation Scheme, Glen Greer, 1984.
176.
A Financial and Economic Survey of South Auckland Town
Milk Producers and Factory Supply Dairy Farmers, 198384, R.G. Moffitt, 1985.
160.
An Economic Survey of New Zealand Wheatgrowers:
Enterprise Analysis, Survey No.8, 1983-84, R.D. Lough,
P.J. McCartin, 1984.
177.
Optimal Pricing and Promotion for Agricultural Marketing
Agencies, S.K. Martin, L. Young, AC. Zwart, 1986.
161.
An Economic Survey of New Zealand Wheatgrowers:
Financial Analysis, 1982-83, R.D. Lough, P.J. McCartin,
1984.
178.
A Contractual Framework for Evaluating Agricultural and
Horticultural Marketing Channels, S.K. Martin, AC, Zwart,
1986.
162.
Farmland Pricing in an Inflationary Economy with
Implications for Public Policy, K.L. Leathers, JD. Gough,
1984.
179.
An Integrated Framework for Analysing Agricultural
Marketing Issues, S.K. Martin, AN. Rae, AC. Zwart, 1986.
180.
163.
An Analysis of Production, Consumption and Borrowing
Behaviour in the North Island Hill Country Pastoral Sector,
A.C. Beck, J.B. Dent, 1984.
Labour Mobility Between New Zealand and Australia, R.L.
St Hill, 1986.
181.
Survey of New Zealand Farmer Intentions and Opinions,
November 1985-January 1986, J.G. Pryde, P.J. McCartin,
1986.
182.
A Financial and Economic Survey of South Auckland Town
Milk Producers and Factory Supply Dairy Farmers, 198485, R.G. Moffitt, 1986.
164.
New Zealand's Inshore Fishery: a Perspective on the
Current Debate, RA. Sandrey, O.K. O'Donnell, 1985.
165.
Land Policy and Land Settlement in New Zealand, J.R.
Fairweather, 1985.
166.
Farm Enlargement in New Zealand, J.R Fairweather, 1985.
183.
An Economic Survey of New Zealand Town Milk
Producers, 1984-85, RG. Moffitt, 1986.
168.
Market Prospects for Maize, SA Hughes, R.L. Sheppard,
1985.
184
An Economic Survey of NZ Wheatgrowers: Financial
Analysis, 1984-85; RD. Lough, P.J. McCartin, 1986
Factor Cost Analysis of a New Zealand Meat Processing
Company, M.D. Clemes, L.D. Woods, 1985.
185
An Economic Survey of New Zealand Wheatgrowers:
Enterprise Analysis, Survey No.9, 1984-85, R.D. Lough,
P.J. McCartin, 1985.
The Effect on Horticulture of Dust and Ash: Proposed
Waikato Coal-Fired Power Station, P.R. McCrea, October
1986
186
An Economic Survey of New Zealand Wheatgrowers:
Financial Analysis, 1983-84, R.D. Lough, P.J. McCartin,
1985.
A Study of the Determinants of Fattening and Grazing
Farm Land Prices in New Zealand, 1962 to 1983. P.G.
Seed, RA Sandrey, B.D. Ward., December 1986
187
Farmers' Responses to Economic Restructuring in
Hurunui and Clutha Counties: Preliminary Analysis of
Survey Data. J.R. Fairweather, July 1987.
188
Survey of NZ Farmer Intentions and Opinions, OctoberDecember 1986. J.G. Pryde, P.J. McCartin, July 1987.
189
Economic Adjustment in New Zealand: A Developed
Country Case Study of Policies and Problems, R.G.
Lattimore, July 1987.
104.
Farmlands Grain (N.Z.) Society Ltd - A Marketing Audit
1980-84, R.G. Lattimore, 1986. (not available)
105
Proceedings of the New Zealand Rural Economy and
Society Study Group Seminar, J.R Fairweather (ed.),
October 1986
106
Papers presented at the Eleventh Annual Conference of
the New Zealand Branch of the Australian Agricultural
Economics Society, Blenheim. Volume 1 and 2. December
1986
169.
170.
171.
172.
Biological Control of Gorse: an ex-ante evaluation, RA
Sandrey, 1985.
173.
The Competitive Position of New Zealand Fresh Fruit
Exports, M.T. Laing, SA Hughes, R.L. Sheppard, 1985.
174.
Marketing Structures for the Horticultural Industry, N.L.
Taylor, R.G. Lattimore, 1985.
DISCUSSION PAPERS
96.
Supply Response Parameters in New Zealand Agriculture
- a Literature Search, M. Wood-Belton, RG.J. Lattimore,
1985.
97.
Papers Presented at the Tenth Annual Conference of the
New Zealand Branch, Australian Agricultural Economics
Society, 1985.
98.
An Examination of Alternative Marketing Structures - a
literature search, D.E. Fowler, R.L. Sheppard, SA Hughes,
1985.
99.
Farm Structure Change in New Zealand and Implications
for Policy, J.R. Fairweather, 1986.
107
Gorse and Goats: Considerations for Biological Control
of Gorse. RA Sandrey, January 1987.
100.
Accounting Developments and Implications for Farm
Business, R.H. Juchau, 1986.
108
Red Deer: The Economic Valuation. RA Sandrey, January
1987.
101.
Maori Fishing Rights in New Zealand: an Economic
Perspective, RA Sandrey, 1986.
109
Rural New Zealand; what next? Ralph Lattimore and Tim
Wallace (eds.). July 1987.
102.
Government's Role in Adverse Events Assistance, T.E.
Dickinson, RA Sandrey, 1986.
110
Dairying in Japan and the Benefits of Adopting New
Zealand Pasture Grazing Techniques. R.G. Moffitt, April
1987.
103.
The Treatment of Taxation in Capital Investment Appraisal,
N.T. Williams, 1986.
111
Selling New Zealand Products in Japan. RG. Moffitt, July
1987.
Additional copies of Research Reports, apart from complimentary copies, are available at $20.00 each.
Discussion Papers are usually $15.00 but copies of Conference Proceedings (which are usually published
as Discussion Papers) are $20.00. Discussion Paper No. 106 is $20.00 per volume and Discussion Paper
No. 109 is $29.70.